promotie Cuijpers.indd - Maastricht University School of Business ...

Doctorate Drs. Rick J.R. Cuijpers
at the Faculty of Economics and Business Administration.
Title: “Determinants of Financial Reporting Choices:
the role of Institutional and Firm-specific Factors”.
Supervisor: Prof. Dr. F. Moers; co-supervisor: Dr. E. Peek.
Wednesday 20 June 2007, 16.00 hours
ABSTRACT
The dissertation studies the influence of country-specific and firm-specific factors on firms’ financial
reporting choices. In three empirical studies, both the choice for a set of reporting standards (local or
international standards) and the choices firms make within these rules are studied. The results show that
reporting choices are driven by a combination of country-specific and firm-specific factors. An important
implication is that a change in reporting regulation, such as the recent introduction of International
Financial Reporting Standards (IFRS) in the EU, will not lead to major changes in the financial reporting
of firms in the short run, because other firm-specific and country-specific influences do not change
simultaneously.
Curriculum Vitae
Rick Cuijpers was born on November 28, 1977 in Sittard, The Netherlands. From 1996 to 2000 he
studied Business Economics at the Faculty of Economics and Business Administration of Maastricht University.
During his studies he worked as a student assistant at the department of Accounting and Information
Management. After graduation, he started working on his Ph.D. dissertation at this department. Since
March 2007, he is an Assistant Professor at the department of Accounting and Information Management.
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Interview
Why did you choose this topic for your dissertation?
“The financial reporting environment for European companies has been rapidly changing over the last
decade. In 2001, the European Commission announced its plan to mandate usage of International
Financial Reporting Standards (IFRS) for all listed companies in the EU. For many companies this is a
major change compared to the national reporting standards they used. IFRS is more shareholder-oriented,
requires firms to disclose more information and often financial statement items have to be measured
differently. Through the studies in my dissertation, I try to determine what drives firms’ reporting choices.
Are they solely driven by financial reporting regulation or do other country-specific and firm-specific
factors play a role?”
Can you give examples of institutional and firm-specific factors that determine the reporting choices?
“Institutional factors influence the reporting choices of large groups of companies. For example, all firms
in a country are subject to the same national accounting standards. However, all accounting standards
leave managers a certain degree of discretion, which means that other factors also drive reporting choices.
Examples of other institutional factors that shape financial reporting are the enforcement of accounting
standards, whether the same rules are used for tax reports and financial reports, and the development of
the country’s equity markets. Firm-specific determinants include the type of shareholders and creditors,
the corporate governance structure, and managerial compensation contracts.”
EFMD
Please Turn Over

Did you find that reporting choices are made on the basis of institutional factors in several European
countries?
“I find that managers make reporting choices based on a combination of institutional and firm-specific
factors. The results in chapter 3 indicate that corporate governance has an impact on firms’ financial
reporting. I show in chapter 4 that the influence of country-specific factors depends on a firm’s ownership
structure. I find that firms with widely held share ownership differ less in their financial reporting internationally
than firms with concentrated ownership. This indicates that the influence of institutional factors
on reporting choices is less for firms with widespread share ownership than for firms with concentrated
share ownership.”
What will be the consequences when the implementation
of IFRS in the EU has little impact for the time
being?
“The influence of the implementation of IFRS across the
EU in 2005 may have a smaller effect than anticipated by
the European Commission. This is because, besides the
reporting standards, other institutional and firm-specific
factors, which have not changed simultaneously, also
have an effect on firms’ reporting choices. Therefore,
during the initial years of IFRS usage, financial reporting
of companies may not become more shareholder-oriented
or more comparable across countries. However, more
and more international differences are disappearing.
Recently, new or revised European legislation has been
adopted, harmonizing, among others, auditing and
transparency requirements across countries. Also, the use
of takeover defence mechanisms, an important firm-specific
reporting determinant, has been limited. Therefore, my
expectation is that over time financial reporting across
the EU will become more comparable and more targeted
at shareholders’ demands.”
Who will benefit from the results of your dissertation?
“Given the reporting discretion that managers have and in order to properly interpret the information in
financial statements, users of these statements need to understand the factors that influence managers’
reporting choices. Furthermore, it is important for regulators to know that companies will respond
differently to institutional reforms, both within and across countries.”
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