EUFIN 2012 - Vysoká škola ekonomická v Praze

EUFIN 2012 - Vysoká škola ekonomická v Praze

The 8 th Workshop onEuropean Financial Reportingin collaboration with Accounting in EuropeEUFIN2012University of Economics PragueFaculty of Finance and AccountingDepartment of Financial Accounting and AuditingCzech Republic September 6-7, 2012CollectedAbstractsandList ofParticipants

4 8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012

6 8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012

Useful InformationAddress and Location of the Workshop VenueUniversity of Economics PragueWinston Churchill Sq. 4130 67 Prague 3 - ŽižkovWiFi connectionVysoká škola ekonomická v PrazeNám. W. Churchilla 4130 67 Praha 3 - ŽižkovGPS Location: 50.084243, 14.441139Area of the University of Economics is covered by WiFinetwork. You can either connect to international academicnetwork "eduroam" (use your name and password fromyour home university) or to a network "conference". User names andpasswords are available at the registration desk at request.TelephoneThe international dialling code for the Czech Republic is +420. Forinternational calls from the Czech Republic dial 00 before a countrycode. There are three mobile providers in the Czech Republic:Telefónica O 2 , T-mobile and Vodafone.TaxiIf you need a taxi we recommend to call 14 0 14 (AAA RADIOTAXI).Currency information1 EUR = appx. 24 CZK, 1 USD = appx. 19 CZK (Czech Crown).Exchange transactions can be made at most bank branches (which areopen usually from 9 00 to 17 00 , Monday – Friday). Banks are closedduring weekends. Please do not change money on the street.Emergency numbersAmbulance service 155 Fire brigade 150Police 158 Metropolitan police 156Emergency 1128 8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012

Time ScheduleThursday, September 6Room09 00 – 10 30 RegistrationUniversity of Economics, Prague10 30 – 11 00 Welcome Address RB10111 00 – 12 30 Opening Plenary Session• Financial reporting of Czech companies – practicalexperienceRB10112 30 – 14 00 Lunch14 00 – 16 00 Parallel Sessions 1 RB112-RB11516 00 – 16 30 Coffee break16 30 – 18 30 Parallel Sessions 2 RB112-RB11620 00 Dinner - Obecní dům (Municipality House)Friday, September 7Room09 00 – 11 00 Parallel Sessions 3 RB112-RB11511 00 – 11 30 Coffee break11 30 – 13 00 Closing Plenary Session• Regulatory environment for Czech listedcompanies – IFRS adoptionRB10113 00 – 13 30 Closing Remarks RB10113 30 Lunch10 8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012

Dinner LocationDinner will be held from 20 00 at:Obecní dům (Municipality House)Náměstí Republiky 5Prague 1http://www.obecnidum.czPlease take your badge with you.How to get the Municipality house...8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012 11

Plenary SessionFinancial reporting of Czech companies – practicalexperienceOpening sessionThursday, 11 00 - 12 30Room:RB101Chair:LadislavMejzlíkLucie Muchová, Finance DirectorPivovary Staropramen A Molson Coors CompanyLeszek Chraścina, Chief Finance andAdministrative OfficerNWR KARBONIA S.A.Petr Vácha, Audit PartnerErnst&YoungRegulatory environment for Czech listed companies –IFRS adoptionClosing SessionFriday, 11 30 - 13 00Room:RB101Chair:MarcelaŽárováVladimír Tomšík, Vice-GovernorCzech National BankPetr Koblic, Chief Executive OfficerPrague Stock ExchangePetr Kříž, Vice-PresidentFédération des experts comptables Européens12 8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012

Parallel Sessions ScheduleThursday, 14:00 – 16:00RoomRB 112ChairDavidALEXANDER1-1/11-1/21-1/3Paul ANDRE, Peter WALTON, Dan YANGVoluntary adoption of IFRS: A study of determinants for UKunlisted firmsVicky COLE, Joel BRANSON, Diane BREESCHDeterminants influencing the accounting policy choicesEuropean listed companies make when applying the IFRS.Luca FORNACIARI, Caterina PESCIA study of value relevance in Italy: from the transition toIAS/IFRS to the financial crisisRoomRB 113ChairDavid CAIRNS1-2/11-2/21-2/3Stephan SCHOENING, Kristin VOLLRATHReducing complexity in reporting financial instruments underIFRSMari PAANANEN, Hannu OJALA, Annelies RENDERSThe Effects of the Extended Disclosure Requirements underIFRS 7: Timeliness and Value RelevanceChiara SACCON, Stefana DIMAFinancial Reporting for Joint Ventures and Capital MarketReactionsRoomRB 114ChairRobin JARVIS1-3/11-3/21-3/3Christina VOETS, Peter KAJUTERThe Impact of Individual Risk Aversion on Impairment Testingunder IFRSDianne MASSOUDIImpair or not to Impair? A Cross Country study of the factorsaffecting the application of IAS 36Gizella DRAGONYACompliance with IFRS 8: Evidence from UK companiesRoomRB 115ChairKristinaARTSBERG1-4/11-4/21-4/3Gaetano MATONTI, Aurelio TOMMASETTIThe Auditor Choice in the Italian Private Firms: An EmpiricalAnalysis of the DeterminantsKarolina SOEDERLUNDAccounting profession - not as uniform as we think?Soledad MOYASocio-economic consequences of IFRS8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012 13

Thursday, 16:30 – 18:30RoomRB 112ChairRichardMARTIN2-1/1 Jon LUNDESGAARDRIV and the Normative Problem in Financial Accounting2-1/2 Christoph PELGERDecision-making on stewardship: An analysis of the standardsettersprocess of identifying the objective of financialreporting2-1/3 Stefania SERVALLI, David ALEXANDERHow to improve the accounting regulation: it is the users,stupidRoomRB 113ChairMichaelJONES2-2/1 Rachel BASKERVILLE, Simon COX, Kevin MCMEEKING,Huw RHYSFit as a Fiddle? Determining the UK Fitness Landscape forLarge and Mid-tier firms2-2/2 Carini CRISTIAN, Monica VENEZIANI, Giulia BENDOTTI,Laura BOSIOA possible narrative section harmonisation?The role of thepractice statement management commentary2-2/3 Marcela ZAROVA, Jana SKALOVAEuropean regulation of cross border mergersRoomRB 114ChairBrigitteEIERLE2-3/1 Paul ANDRE, Dionysia DYONISIOU, IoannisTSALAVOUTASMandatory adoption of IFRS by EU listed firms andComparability: Determinants and Analysts Forecasts2-3/2 Maximilian MUELLER, Stefan HAHNTransition from U.S. GAAP to IFRS - Effects on EarningsInformativeness2-3/3 Irena JINDRICHOVSKA, Dana KUBICKOVAImpact of IFRS Adoption on Key Financial Ratios: the Case ofthe Czech RepublicRoomRB 115ChairJill COLLIS2-4/1 Stefanie CEUSTERMANS, Diane BREESCHFinancial reporting regulation: Valuable or burdensome? Anexploratory test-case for micro-entities2-4/2 Markus GROTTKE, Thomas SPAETH, Felix HAENDELlEconomic Consequences of IFRS for SMEs - Evidence fromGerman Small and Medium Sized Companies2-4/3 Mari PAANANEN, Marita BLOMKVISTThe Cost of Debt Implications of Financial Reporting QualityAmong Privately Owned Swedish SMEsRoomRB 116ChairAxel HALLER2-5/1 Anja HJELSTROEMSo, what about the audit? Identifying and articulatingappropriate accounting principles for revenue recognition2-5/2 Alain DEVALLE, Davide SCALTRITOIs comprehensive income more value relevant than netincome? An empirical evidence from Italy for the six yearperiod 2005-20102-5/3 David PROCHAZKADevelopment of Financial and Management AccountingSystems of Czech Companies after the IFRS Adoption14 8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012

Friday, 9:00 – 11:00RoomRB 112ChairAlain DEVALLE3-1/13-1/23-1/3Fito ANGELS, Soledad MOYA, Neus ORGAZConsidering the Effects on Operating Lease Capitalization onKey Financial RatiosFabian ECHTERLING, Brigitte EIERLEA Research Note on Sorting Based Beta Adjustments used inBusiness Valuation Practice: A Laboratory-Simulation ApproachJan MARTON, Emmeli RUNESSONJudgment in accounting The case of credit losses in banksRoomRB 113ChairPaul ANDRÉ3-2/13-2/23-2/3Olga FERRARO, Stefania VELTRIExamining the incremental value relevance of as reportedother comprehensive income in the Italian Stock ExchangeFinn SCHOELERVoluntary disclosing cash flow statement in non-listed mediumsized companies.Michael SCHOLZ, Guenther GEBHARDTThe Usefulness of Direct Cash Flow StatementsRoomRB 114ChairAnjaHJELSTRÖM3-3/13-3/23-3/3Jill COLLIS, Hannu OJALA, Lasse NIEMI, JuhaKINNUNEN, Pontus TROBERGCapital structure as a determinant of voluntary audit in microcompaniesand the impact on earnings qualityMichael JONES, Carmen GRABSCH, Jill SOLOMONAccounting for biodiversity in crisisHana BOHUSOVA, Patrik SVOBODAWine industry reporting: Is it necessary to develop specialtreatment for wine industry reporting?RoomRB 115ChairLisa EVANS3-4/13-4/23-4/3Christopher NOBES, Erlend KVAALOn improving the measurement of book-tax conformityAxel HALLER, Eva-Maria FERSTLThe Relationship of Financial and Tax Accounting in Germany -A revisit after 20 yearsFelix MADRIDDevelopments and challenges in public sector accounting8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012 15

Collected Abstracts1-1/1 Thursday, 14:00 - 16:00, Room: RB 112 ID: 38Paul ANDRE (ESSEC Business School), Peter WALTON, Dan YANGVoluntary adoption of IFRS: A study of determinants for UK unlisted firmsWe examine the determinants of voluntary adoption of IFRS by medium-to-largeUK unlisted firms (8417 firms comprising 287 IFRS firms and 8130 non-IFRS firmsin 2009). Analysing voluntary adoption allows us to better understand thecost/benefits of choosing a specific set of accounting standards. Using univariateand multivariate analyses, we find that internationality, leverage, firm size andauditor reputation help explain UK unlisted firms choice of voluntarily selectingIFRS. Other firm characteristics such as profitability, capital intensity, industry,growth, ownership structure, and employee productivity do not appear to play asignificant role in the decision. Additionally, we find that newly incorporatedfirms a higher probability of adopting IFRS.1-1/2 Thursday, 14:00 - 16:00, Room: RB 112 ID: 44Vicky COLE (Vrije Universiteit Brussel), Joel BRANSON, Diane BREESCHDeterminants influencing the accounting policy choices European listedcompanies make when applying the IFRS.In this paper we investigate whether or not European listed companies make useof the options offered by the IFRS and if so, which determinants influence thesechoices and how this affects the de facto comparability of European IFRSfinancial statements. We analyse the choices of 149 companies from Belgium,Finland, Germany, the Netherlands and the UK operating in the industriesIndustrial goods and services, Financials or Technology. We investigate the effectof country, industry, company size, capital structure and auditor on 36 optionswithin the IFRS. We find that 13 options are rarely used differently and seven ofthese options can be removed. Most options, however, are used differently. Theaccounting choices are predominantly influenced by the country of origin withclusters based on year of joining the EU or neighbouring countries withshared/related languages. The European IFRS financial statements are thus notde facto comparable yet. The contribution of the study is threefold: it identifiesthe options that are not or rarely used and that can be removed in order tosimplify the IFRS, it offers insight into the determinants affecting accounting16 8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012

policy choices made by companies, and it mitigates the idea of de factocomparability.1-1/3 Thursday, 14:00 - 16:00, Room: RB 112 ID: 52Luca FORNACIARI (University of Parma), Caterina PESCIA study of value relevance in Italy: from the transition to IAS/IFRS to the financialcrisisThis study belongs in the specific line of research into value relevance that aimsto assess the consequences on companies market values of the introduction ofthe International Accounting Standards (IAS/IFRS). Value relevance indicates theassociation between prices (or returns) of shares listed on regulated marketsand accounting information in general, values such as earning and equity. Thisarea of research belongs within the context of accounting studies, and in Italycould represent the modern continuation of classical accounting studies. Thespecific research area concerns the role of the IAS/IFRS, investigating whetherthe adoption of the IAS/IFRS has led to a greater correlation between importantfinancial statement values (net income, comprehensive income and equity) andstock market capitalization than in the pre-IAS/IFRS period. The study focuses onthe Italian situation, analyzing a sample of 114 companies listed on the MilanStock Exchange. The companies belong to the banking, assurance and industrialsectors. We analyze a period of eight years (2003-2010). The length of analysisperiod is a feature that distinguishes this study from previous studies on valuerelevance conducted in Italy (i.e. Devalle, 2010; Pavan & Paglietti 2011). Theperiod in fact includes years preceding the adoption of the IAS/IFRS, thetransition year to the IAS/IFRS, the years immediately following the adoption ofthe IAS and more recent years characterized by the global financial crisis. Theresults show the evolution of value relevance of earning and equity makepossible comparison between IAS/IFRS and Italian accounting principles. Theresearch shows specific results on the value relevance of accounting informationin industrial and financial sectors, and regarding earning in comparison withcomprehensive income. Moreover in this paper the contribution to the VR ofeach type of Other Comprehensive Income is evaluated (Pronobis and Zulch,2010; Fiori et al., 2011).In relation to the critique of value relevance studies by Holthausen and Watts(2001) and subsequent reactions of Barth et al. (2001), this paper offers insightsabout the usefulness of value relevance especially in periods of financial crisis.8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012 17

1-2/1 Thursday, 14:00 - 16:00, Room: RB 113 ID: 35Stephan SCHOENING (WHL Graduate School of Business and Econ), KristinVOLLRATHReducing complexity in reporting financial instruments under IFRSIn November 2009 the IASB took the Project for the replacement of IAS 39actively on its agenda. The project is intended to reduce complexity of theaccounting regulation for finan-cial instruments and hedge accounting. StandardIAS 39 should be completely replaced by a new standard IFRS 9. The IASB splitthe project into three phases: classification and meas-urement, impairmentmethodology and hedge accounting. The study focusses on the third projectphase, which considers hedge accounting.The study deals with the question how existing hedge accounting regulation canbe improved, in order to reduce inconsistencies between financial accountingand economic risk manage-ment. The study focusses on weaknesses of thePortfolio hedge of interest rate risk model which is largely applied by retailbanks.The study outlines major complexities in applying the model due to existingregulation on eligible portfolio items, eligible hedging instruments andeffectiveness assessment and pro-poses possible amendments to the standard.The result of the analysis provides evidence that major complexities in applyingthe model are due to inconsistencies between existing accounting regulationand economic risk manage-ment. However, methodology on effectivenesscalculation under the Portfolio hedge of inter-est rate risk model is a furthersource of complexity.1-2/2 Thursday, 14:00 - 16:00, Room: RB 113 ID: 67Mari PAANANEN (Brunel University), Hannu OJALA, Annelies RENDERSThe Effects of the Extended Disclosure Requirements under IFRS 7: Timelinessand Value RelevanceWe examine the effects of the new disclosure requirements under IFRS 7Financial Instruments: Disclosures (IFRS 7) on the timeliness of financialreporting in terms of the number of days delay in the release of the annualreport and the value relevance in terms of the association between share pricesand earnings and book value of shareholders equity before and after IFRS 7 wentinto effect in 2007. We find that the lead time between the fiscal year end andthe date of the release of the annual reports is more than 33 days shorter afterthe introduction of IFRS 7, controlling for the financial crisis in 2008, firm-specificfactors, and economic and institutional determinants. We also find a significantdecrease in the reliance on both reported earnings and shareholders equity after18 8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012

the introduction of IFRS 7, controlling for economic and institutional settings.Our results suggest that IFRS 7 resulted in a twofold increase in usefulness toinvestors: (1) banks released the information related to the levels of riskexposure more promptly and (2) the investors used this information to reassesstheir reliance on reported earnings and book value of shareholders equity.1-2/3 Thursday, 14:00 - 16:00, Room: RB 113 ID: 70Chiara SACCON (CA FOSCARI UNIVERSITY OF VENICE), Stefana DIMAFinancial Reporting for Joint Ventures and Capital Market ReactionsDuring the recent years, there has been a fervent debate over the changesbrought into the field of consolidation by the joint IASB and US FASB project.Aiming at assuring convergence between the international Financial reportingStandards (IFRSs) and US GAAP, the project concluded in 2011 with the issuanceof three standards concerning the financial reporting and disclosurerequirements of interests in subsidiaries, joint arrangements, associates andunconsolidated structured entities (effective expected date 1 January 2013).IFRS 10 sets out the principles for the presentation and preparation ofconsolidated financial statements by the parent company; IFRS 11 regards theaccounting of interests in joint arrangements, while the objective of IFRS 12 is torequire the disclosure of information that enables users of financial statementsto evaluate: the nature of, and risks associated with, the interests in otherentities as well as the effects of those interests on the financial position,financial performance and cash flows.The core argument of the present paper is that IFRSs are designed to providerelevant financial information to a wide range of users which include the existingand potential investors, creditors, investment funds, managers, etc. Higher thequality of the information supplied by financial reporting, better the outcomesof the decision making process of the participants on capital markets, lower theinformation asymmetry within the respective markets. Thus, the workinghypothesis of this paper is that the changes in financial reporting for jointventures (JVs) can reduce the information asymmetry issues; and that for thisreason, the topic must be under careful scrutiny.Hence, our approach takes into consideration the recently issued IFRS 11, whichis of critical importance to the nature and quality of the financial informationtransmitted by the issuers to the market. The expected outcome of such ananalysis resides in the idea that these changes in financial reporting are areflection of the role played by the international joint ventures (IJVs) on theglobal markets and extensively within the entire economic system.From the accounting perspective, the research awareness in the JVs field islinked to the attractiveness of these investments in different sectors of activity.8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012 19

Seldom JVs "comprise a major part - sometimes all - of the activities of entities insome sectors" (Ernst & Young, 2004: 488).Moreover, half of the equity investments in the United States representinvestments in joint ventures(Stoltzfus and Epps, 2005: 10). To these reasonsalso add the fact that the sectors in which JVs are concentrated "have developedgenerally accepted industry GAAPs" and "any attempt to standardise theaccounting at this stage could have led to industry opposition so strong as tohave seriously impeded the harmonisation programme" (Ernst & Young, 2004:488).The paper is organized as follows. Section 2 includes some methodologicalconsiderations; Section 3 revisits the literature on the role of joint ventures inthe context of capital market; Section 4 provides a short history of thedevelopment of IASBs joint ventures project; Section 5 presents somearguments in favor and against the two accounting methods for joint venturesrepresentation; Section 6 reveals a short synopsis of the changes in the financialreporting of these investments; and Section 7 concludes.1-3/1 Thursday, 14:00 - 16:00, Room: RB 114 ID: 39Christina VOETS (University of Muenster), Peter KAJUTERThe Impact of Individual Risk Aversion on Impairment Testing under IFRSThe results of prior research suggest that application of IFRS varies acrosscountries. However, existing literature on IFRS lacks an investigation of whetherdrivers of differences in accounting practices exist even within a country.Especially individual differences in perception and evaluation of accountingissues may lead to diverging accounting practices. In particular the managementapproach inherent in IFRS allows for a consideration of internally generated andthus biased data in financial statements. This study examines the impact ofindividual differences in risk aversion on impairment testing practices as themost prominent example of the management approach. Our experimentalanalysis reveals that impairment practices in both detection of an impairmentindication and determination of the recoverable amount vary depending on thedecision makers level of risk aversion. Consequently, this study providesevidence of diverging accounting practices under the disguise of financialreporting harmonization and improvement of comparability. Our findings implythat standard setters might revise IFRS accounting principles in order to reducethe scope for unintended accounting differences resulting from divergingperceptions and situational assessments.20 8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012

1-3/2 Thursday, 14:00 - 16:00, Room: RB 114 ID: 23Dianne MASSOUDI (University of Western Australia)Impair or not to Impair? A Cross Country study of the factors affecting theapplication of IAS 36This study examines the incidence and amount of IAS 36 asset impairmentreported by Australia, French, German, Italian, Swedish and UK companies fromthe industrial, consumer discretionary and information technology sectors in thefour years following IFRS adoption (367 company-years). It is hypothesized thatimpairment reporting practices are driven by managerial incentives, which havebeen proxied by variables such as book to market (BTM), return on assets, debtcovenant violations concerns, CEO change and goodwill reported. I find that theincidence of impairment is related to BTM, ROA and CEO change, country,ownership concentration, country of foreign listing and age. For the amount ofimpairment, my results suggest that companies with lower BTM, not reporting aloss before impairment, lower interest coverage, CEO change and more highlystructured companies as evidenced by segments reported and foreign listingsother than Europe and US, are more likely to record a higher amount ofimpairment. Finally, in the 2008/2009 fiscal year I find that managers may beopportunistically reporting impairment for companies that report higher levelsof goodwill although their assets showing little indication of impairment.1-3/3 Thursday, 14:00 - 16:00, Room: RB 114 ID: 33Gizella DRAGONYA (Heriot-Watt University, Edinburgh)Compliance with IFRS 8: Evidence from UK companiesBased on the segmental reporting practice of a sample of 200 listed UKcompanies the research analyses the level of compliance with the segmentreporting requirements of IFRS 8. The study also tests for a relationship betweenselected company characteristics and compliance levels with the reportingrequirements of IFRS 8. The compliance level ranges from 45.54% to 100.00%,with an average of 87.07%. However, the level of non-compliance with theentity wide disclosure requirements of IFRS 8 (average 76.54%) and the variationbetween the compliance levels of individual companies are considerable. Thereis evidence that the companies are withholding sensitive information (such ase.g. reliance on major customers, non-current assets and external revenueattributed to the entity`s country of domicile and other foreign countries) whichprovides support for the proprietary cost theory. The findings reveal that thelevel of compliance is significantly greater for companies organised arounddifferences in products and services (business reporting segments) ordifferences in a combination of products, services and geographical areas (mixed8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012 21

eporting segments) compared to companies organised around differentgeographical areas (geographic reporting segments). The evidences suggest thathaving different auditors is another important company characteristic inexplaining the overall level of compliance with the segmental reportingrequirements of IFRS 8. The results also indicate some link between greatercompliance level and the company being listed in the US, having higherprofitability and lower company size and gearing.1-4/1 Thursday, 14:00 - 16:00, Room: RB 115 ID: 69Gaetano MATONTI (University of Salerno), Aurelio TOMMASETTIThe Auditor Choice in the Italian Private Firms: An Empirical Analysis of theDeterminantsThe Reform of corporate governance of 2003 and the reform of auditing of 2010(Decree Legislative No. 39/2010) allowed all Italian firms adopting the"traditional" model of corporate governance to choose the auditor bodybetween the Board of Statutory Auditors (in Italian the "Collegio Sindacale") andan external auditor (a single auditor or an Big 4 or non-Big 4 Audit company).Prior literature on the audit quality (Mariani, Tettamanzi and Corno, 2010;Cameran and Prencipe, 2011) finds that the Big 4 audit firms provide a highquality auditing than the Board of Statutory Audit. Jensen and Meckling (1976)demonstrate that the demand for high quality auditor services increases whenagency problems are more severe. We analyse a sample of 397 Italian privatefirms adopting the "traditional" corporate governance model and we find thatabout the 85% of them are audited by the Board of Statutory Audit, while onlyabout 15% by an external auditor. Our findings also show that Italian firms haveless incentive to be audited by an external auditor. On this basis, we concludethat in absence of severe litigation risks the Italian private firms are more likelyto be audited by the BSA. The results suggest two main conclusions that mayhelp Italian Government to highlight the great importance of the Board ofStatutory Auditors for Italian private firms. First, private firms are more likelythan public firms to communicate privately with shareholders, creditors,employees, suppliers, customers and others. This circumstance may reduce thefirms incentives to be audited by an external high quality auditor because thefinancial statements of private firms are not widely distributed, and are notanalysed by a large number of "strong" stakeholders. This circumstance explainsthe following second conclusion. With weak agency conflicts, the Administrativeauditing carried out by the BSA in the firms adopting the "traditional" corporategovernance model (art. 2403 of Italian Civil Code) may improves processeffectiveness and efficiency, increase compliance by law and reduces internalinformation asymmetries. These benefits, instead, are related to an externalauditor by the international literature (e.g., Newton and Ashton, 1989).22 8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012

1-4/2 Thursday, 14:00 - 16:00, Room: RB 115 ID: 68Karolina SOEDERLUND (Abo Akademi University)Accounting profession - not as uniform as we think?The Finnish accounting law has since the 1970s been based on a Finnishaccounting theory called Expenditure-Income-Theory. Finlands membership inEFTA and EU lead to changes in the accounting act in the 1990s due to EuropeanAccounting Directives and because of IFRS in 2005. Some members of theprofession did drive the change in the accounting act because they wanted itmore harmonized. Others opposed the change because they wanted to keep theExpenditure-Income-Theory as base for the accounting act. This raises thequestion if the accountants or auditors background or working place affectstheir opinion? Preliminary results show that the working place do not seem tomake a difference in opinion.1-4/3 Thursday, 14:00 - 16:00, Room: RB 115 ID: 57Soledad MOYA (EADA BUSINESS SCHOOL)Socio-economic consequences of IFRSThe debate about consequences of international accounting standards and thedevelopment of effects analysis is greatly in force. Since IFRS have become thekey for globalization in accounting regulation, the effects derived from theirimplementation are a necessary issue for analysis and there is a call for researchin the subject. Regulators are currently introducing effects analysis in their dueprocess, however, there is still a lot to be done. And the first question thatcomes to our minds is that of what we are referring to when we talk aboutconsequences of accounting standards derived from IFRS voluntary orcompulsory adoption. In this paper we try to outline a map of possible effects,both social and economic, which may help us to understand and therefore, toadvance, in the study of these effects.2-1/1 Thursday, 16:30 - 18:30, Room: RB 112 ID: 30Jon LUNDESGAARD (Hedmark University College)RIV and the Normative Problem in Financial AccountingIn an impressing and influential monograph from 1961, Edwards and Bell facethe problem of re-shaping financial accounting so that what is seen as actual anddecision relevant information is included. The source of inspiration for this isneoclassical economics, and the focus is on how the output of financialaccounting, in particular the income statement and the balance sheet, can beimproved as such. Overlooked is that users of financial accounting output anchor8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012 23

on what is reported, and add their own judgments. What is anchored on shouldbe clear and reliable. The residual income approach to valuation (RIV) is basedon accounting figures, and is a demonstration of how this functions. The basicnormative question is whether financial accounting does have meaning, or not.RIV offers confirmation I a positive direction. For practitioners this is lessinteresting. They are more concerned about how accounting is done, and thisleads to the normative problem of what is good or less good accounting. So faranswers are less definitive. However, RIV may offer some clues. In discussingthis, work of Stephen Penman has been a great inspiration.2-1/2 Thursday, 16:30 - 18:30, Room: RB 112 ID: 47Christoph PELGER (University of Cologne)Decision-making on stewardship: An analysis of the standard-setters process ofidentifying the objective of financial reportingIn their joint project to create a revised conceptual framework, IASB and FASBdecided to define valuation usefulness as the single objective of financialreporting while neglecting stewardship usefulness. This paper addresses thequestion why the standard-setters decided that way. The method employed is aprocess analysis of standard-setting in the case of accounting objectivesincluding a comprehensive (content) analysis of all documents available from thedue process. It results that the supremacy of valuation usefulness mainly followsfrom the preferences of US board members. Despite a large opposition fromconstituents and some board members, this group was able to establish itsposition due to assistance from the staff and obvious differences in the balancesof power that were reinforced by the pending decision of the SEC on IFRSadoption and the lack of a consistent (alternative) stewardship world-view forfinancial reporting.2-1/3 Thursday, 16:30 - 18:30, Room: RB 112 ID: 48Stefania SERVALLI (University of Bergamo (Italy)), David ALEXANDERHow to improve the accounting regulation: it is the users, stupidThe macro-accounting regulation, relating to the function of allocating economicresources in the capital market, by influencing the investors decision-making(Oguri 2005, p.90) influences macro-societal policies, such as the ones referredto taxation, to wage bargaining, and, more in general, to economicrestructuration (Chua, 1986, p.623).In a globalized world, this kind of regulation has become more relevant, givingway towards a global macro-accounting regulation, with a consequentmovement beyond the State and its institutions. The accounting as social24 8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012

construction is explored in section 2, while section 3 considers public interestimplications emerging in this context. Regulators and the market for accountingservices are explored in section 4, while section 5 tries to propose a way out inthe complex relation Regulators, Accounting and Markets, underlining the roleof financial information users.2-2/1 Thursday, 16:30 - 18:30, Room: RB 113 ID: 31Rachel BASKERVILLE (Victoria University of Wellington), Simon COX, KevinMCMEEKING, Huw RHYSFit as a Fiddle? Determining the UK Fitness Landscape for Large and Mid-tierfirmsOrganizations enhance their fitness by modifying their existing attributes, andthese landscapes are conjectured to range from smooth to rugged. By defininglandscape as a fitness landscape , this study determines from the most recentpublicly available financial data if the fitness of twenty mid-tier and large UKaccounting firms is highly interactive, i.e. whether the value of one feature (e.g.specialisation) depends on a variety of other features (e.g. size or spread ofoffices). The particular research question in this study is: do the largest UKaccounting firms undertake strategic decisions in a landscape which can bedistinguished from that in which Mid-tier firms operate?The methodology is to identify K from N attributes for the Big Four and Mid-tierfirms utilising financial data regarding accounting firm size, activities etc.available in the public domain. Much other research focuses on organizationalfields, but these are implicitly bounded domains - often self-reflexively -whereas the advantage of reification of a landscape for multi-entity analysisimputes boundaries are dynamic and negotiated, if they exist at all.The simulation in this study offers a fresh understanding to changes in thestrategic landscape following the adoption of limited liability partnershipstructures by accounting firms in the last ten years. If, as we had conjectured,the largest firms were able to be correctly distinguished from Mid-tier firms bythe ruggedness of their landscape in this simulation, this may have hadimplications for the possible entry of one or more of the Mid-tier firms - bymergers or organic growth - up to the same level of operations as currentlyundertaken by the Big Four. This links to debates on the processes and outcomesfrom the strategic globalization of Big Four accounting firms, to the extent thatthe Big Four are now more commonly studied as global professional networks.The proxies we used are clearly more complex than has to be assumed in orderto undertake the simulation. However, the dependent variable Fees per partnerbuilds in brand value in so far as it translates into actual revenue differentials.The insights that the NK model have given to understanding organizational8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012 25

ehaviour and choices in strategic direction have, to date, been based onresearch in firms where strategic intentions are observed through non-financialdata. In this study we offered an initial identification of real-life attributes to beused as proxies for the strategic activities. These may be further refined orchallenged.2-2/2 Thursday, 16:30 - 18:30, Room: RB 113 ID: 41Carini CRISTIAN (Universitu of Brescia), Monica VENEZIANI, Giulia BENDOTTI,Laura BOSIOA possible narrative section harmonisation?The role of the practice statementmanagement commentaryThe Practice Statement provides a flexible approach to preparation of themanagement commentary, generating more meaningful disclosure anddiscussing those matters that are more relevant to the company individualcircumstances. In this direction the International Accounting Standards Board(IASB) has highlighted some content elements recognised as being fundamentalfor guaranteeing the usefulness of the management commentary.With reference to these elements, it is interesting to analyse the level ofdisclosure of the financial reporting. These analyses aim to identify the themesdealt with most extensively by the companies and those that require greaterattention so that the narrative section of the financial statement is, on the onehand, at least consistent with the suggestions of the guideline and, on the other,contains information that is useful for the users. Lastly, in the light of therelevant European Union directives the results of the analysis will help toformulate considerations on the ability of the IASB guideline to improve thecompleteness of the narrative section.All this is examined in a cross-country dimension: financial reports in Italy andthe UK are examined. The content analysis methodology is applied. Within thefinancial reporting, the management discussion is examined in particular. Theanalysis is performed considering 2008. This qualitative paper will contribute tothe studies on disclosure and usefulness of the information provided.2-2/3 Thursday, 16:30 - 18:30, Room: RB 113 ID: 51Marcela ZAROVA (University of Economics, Prague), Jana SKALOVAEuropean regulation of cross border mergersThis paper addresses general problems of cross-border mergers in Europe,demonstrates obstacles in cross-border mergers realization and outlinespossible solutions for the conflict of laws that can arise in the context ofmergers. The number of realized cross-border mergers in Europe is very low26 8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012

despite the fact that the directive on cross-border mergers of limited liabilitycompanies (Tenth Directive) was issued seven years ago and the obligation ofdirective transposition was dated as to 2007. Moreover, the Tenth Directiveimposed the obligation on Member States to revise their legal systems in such away as to facilitate the realisation of cross-border mergers between MemberStates. The stumbling block is in the fact that each state adopts its owncustomized regulation which brings many situations, where cross-bordermergers are difficult or even impossible.The article investigates empirical data concerning European cross-bordermergers and detailed situation in the Czech Republic. Using comparativeanalysis, the article further analyse conditions in ten selected Europeancountries in which cross-border mergers are realized. The analysis of conditionsbrings beside criticism of the activity of the European Commission in this field,also answers to improve present situation.Based on empirical data, this study suggests gradual amendment of the currentlaws and regulations in the EU Member States in order to introduce flexibleoption as for the decisive date. This would eliminate the above mentioneddisharmonies and increase the number of cross-border mergers.2-3/1 Thursday, 16:30 - 18:30, Room: RB 114 ID: 37Paul ANDRE (ESSEC Business School), Dionysia DYONISIOU, IoannisTSALAVOUTASMandatory adoption of IFRS by EU listed firms and Comparability: Determinantsand Analysts ForecastsIn 2005 the EU adopted IFRS for all listed companies publishing consolidatedfinancial statements in Europe. The transition from national accountingstandards to IFRS was complex and costly but the main arguments for it includedthe improvement in comparability across companies and improvement in capitalmarkets efficiency. This study focuses on the comparability of the financialstatements of EU listed firms before (2003) and after (2005 & 2010) IFRSmandatory implementation and on its determinants and consequences. We findsignificant convergence in firms accounting practices (input comparability) afterIFRS. Output comparability also significantly improves between the pre and postIFRS periods. However neither of the two measures improves with IFRSfamiliarity (no significant difference between 2005 and 2010). Furthermore wefind that output comparability is not driven by the convergence in accountingchoices. Our tests strongly suggest that output comparability is improvedbecause of IFRS adoption and more comparable accruals in relation to industrypeers. This suggests that more comparable accruals facilitate investors to valuefirms more accurately. In fact we find that more comparable accruals facilitate8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012 27

lower analysts forecast dispersion. Finally we find that analysts forecasts errorsdeclining as output comparability increases suggesting that output comparabilityincreases the usefulness of accounting information.2-3/2 Thursday, 16:30 - 18:30, Room: RB 114 ID: 59Maximilian MUELLER (WHU - Otto Beisheim School of Management), StefanHAHNTransition from U.S. GAAP to IFRS - Effects on Earnings InformativenessThis paper is the first to investigate whether a transition from reporting underU.S. GAAP to reporting under IFRS affects firms financial reporting properties,providing such evidence on one specific property: earnings informativeness. Weexploit the unique setting of the German capital market: Our treatment group iscomposed of firms that reported under U.S. GAAP before being required byEuropean law to adopt IFRS, and our control group is a matched sample ofGerman firms that reported under IFRS throughout our analysis period (2001-2010). This difference-indifferences research design allows us to hold constantinstitutional factors and reporting incentives in order to isolate the effect of IFRSadoption on U.S. GAAP firms earnings informativeness. Taking advantage ofhand-collected data from required U.S. GAAP-to-IFRS reconciliations, we find asignificant increase in earnings informativeness for a subsample of firms withlarge relative de facto differences between U.S. GAAP and IFRS net incomes.However, we fail to find a significant average effect for the full sample. Theseresults are consistent with IFRS adoption impacting financial reportingproperties, but only where firms are materially affected by the differencesbetween the two sets of reporting standards. Our findings contribute to thedebate on IFRS adoption in the U.S. by helping regulators assess the potentialeffects of a transition from U.S. GAAP to IFRS on the properties of adoptersfinancial statements, and by pointing towards reporting issues whereconvergence has not yet been achieved.2-3/3 Thursday, 16:30 - 18:30, Room: RB 114 ID: 64Irena JINDRICHOVSKA (VSFS), Dana KUBICKOVAImpact of IFRS Adoption on Key Financial Ratios: the Case of the Czech RepublicThis contribution analyses the impact of new IFRS reporting rules on financialratios prepared in the Czech companies. Using a sample of 16 Czech firms, weattempt to measure the scope and size of the differences in selected set offinancial ratios as calculated with data reported according to the traditionalCzech accounting rules (CAS) and under the IFRS provisions. Our study discoversthat there are important differences resulting from these two reporting formats.28 8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012

Our research comes to a conclusion, that translation of Czech statements to IFRSmay cause changes in the value of financial indicators without relationship tothe real change in the firms value, performance and stability. Even though thefindings were not statistically significant the indicative results of ourmeasurements disclosed an important fact that the transition to IFRS couldcause deterioration of key indicators and thereby could impact on the overallrating of companies. One needs to be cautious with generalization due to thesmall sample size.2-4/1 Thursday, 16:30 - 18:30, Room: RB 115 ID: 46Stefanie CEUSTERMANS (Vrije Universiteit Brussel), Diane BREESCHFinancial reporting regulation: Valuable or burdensome? An exploratory testcasefor micro-entitiesAlthough the literature suggests there are incentives for companies to voluntarydisclose all their financial information, in reality it seems that companiestypically do not disclose more than regulation requires. One reason for this isthat disclosing information is costly for the company, whereas the benefits aremainly incurred by the public. Regulation may be justified to ensure a certainlevel of transparency to protect those stakeholders who don not have the powerto extract information from the company. Although there are both argumentsfor and against regulation, it remains largely an empirical question whetherthere should be disclosure regulation and to what extent. The existing literaturethat examines the cost and benefits of financial reporting regulation does somainly in a context of capital markets, leaving the need for financial reportingregulation in the small private context largely unexplored. The aim of this paperis therefore to explore the costs and benefits of financial reporting regulation forSMEs. In the light of the current developments and deregulation debate, anexploratory test-case was conducted on the costs and benefits of financialreporting for micro-entities. This might be interesting since the net benefits arelikely to be less evident for the smallest companies because of the higher cost ofcompliance and the proportionately lower public interest in micro-entities.2-4/2 Thursday, 16:30 - 18:30, Room: RB 115 ID: 58Markus GROTTKE (University of Passau), Thomas SPAETH, Felix HAENDELlEconomic Consequences of IFRS for SMEs - Evidence from German Small andMedium Sized CompaniesIn July 2009 the IASB finalized its Accounting System IFRS for SMEs. Since thendebates have taken place whether this accounting standard is suitable forintroduction throughout Europe. We add to the debate by presenting the results8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012 29

of an online survey between German Small and Medium Sized Entities. In thestudy we focus on finding out which accounting purposes are pursued by SMEs,whether they regard international harmonization feasible and necessary andfinally, which impact they expect from controversial disclosures in the notes. Inaddition, we ask for an overall judgment of all aspects mentioned in the survey.Using the partially least square method, we then provide a causal analysis whichclarifies how the different answers account for the final judgment over IFRS forSMEs, so as to derive recommendations concerning the potential introduction ofIFRS for SMEs.2-4/3 Thursday, 16:30 - 18:30, Room: RB 115 ID: 66Mari PAANANEN (Brunel University), Marita BLOMKVISTThe Cost of Debt Implications of Financial Reporting Quality Among PrivatelyOwned Swedish SMEsUsing a unique database and manually collected data we analyse and documentaccounting choices made by Swedish SMEs between 2005 and 2008. We findthat given an option to report under Swedish GAAP or a translation of IFRS(SFASC/IFRS), only 5 firms out of 1,500 opted to do so. Further analysis ofchoices of picking individual standards of SFASC/IFRS shows no significantdifference across Gazelles and Non-Gazelles. Among firms that select individualSFASC/IFRS standards most opt to use the percentage-ofcompletion method forlong-term contracts. We also investigate differences in quality of financialreporting across Gazelles and Non-Gazelles and find that the financial reportingquality is consistently higher among Gazelles compared to Non-Gazelles. Test ofcost of debt implications show that creditors find Gazelles financial reportingmore useful to assess the credit risk resulting in lower cost of debt for this groupof firms. Thus, SMEs seem to have little incentive to switch to SFASC/IFRS, whichmay be an indication of their attitude to future adoption of IFRS for SMEs aswell. Furthermore, the results suggest that SMEs with an incentive to producehigh quality financial reporting to raise capital, Gazelles, are able to do so usingSwedish GAAP. These findings raise the question whether the IFRS for SMEsproject is worthwhile.2-5/1 Thursday, 16:30 - 18:30, Room: RB 116 ID: 61Anja HJELSTROEM (Stockholm School of Economics)So, what about the audit? Identifying and articulating appropriate accountingprinciples for revenue recognitionThis is a very early version of a paper on the redeliberation of the IASB and FASBjoint draft standard on revenue from customer contracts during 2011.30 8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012

Historically participant observation research of accoutning standard setting hasbeen constrained by closed doors as well as cost and time considerations. Today,however, IASB boardmeetings are accessible through web-casts. This paperexplores this new window of looking inside the black box of board deliberations.Can an analysis at the detailed level offer insight into the forces and factors thatshape the development of IFRS?While previous research tend to focus on the political dimensions of standardsetting, this study takes its starting point in the fact that standard-settingcontinuous to be described as a technical and political process and uses a modelof the politics of organisational learning as a guiding framework. This ispresented in the following section after a brief review of theoreticalperspectives used for analysing issues relating to standard setting in previousresearch.Based this exploratory case-study this paper suggests that the process ofdeveloping accounting standards is shaped by two major challenges. One is toidentify and agree on what is the appropriate solution(s). Another is to articulatethis solution. In both cases, the ambiguity of language is key and example basedreasoning is extensively used as a means of communication, tranlating hunchesinto ideas and shared understanding.2-5/2 Thursday, 16:30 - 18:30, Room: RB 116 ID: 43Alain DEVALLE (university of Turin), Davide SCALTRITOIs comprehensive income more value relevant than net income? An empiricalevidence from Italy for the six year period 2005-2010The paper aims at verifying if comprehensive income is a better performancemeasure than net income comparing the value relevance of the net income andthe total comprehensive income reported under IFRSs. The paper aims atverifying whether the total comprehensive income is more value relevant thanthe net income in Italy by analysing 852 companies. To this purpose, accountingand market data regarding companies listed on the Italian Stock Exchange havebeen collected for the years 2005-2010. Valuation models have been used toassess the differences in value relevance by using total comprehensive incomeor net income. Findings show that total comprehensive income has not resultedin an unquestionable increase in value relevance compared with net income.This research contributes to defining the relevance of the total comprehensiveincome and to the international debate about which overall companyperformance should be reported in the IFRS financial statement.8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012 31

2-5/3 Thursday, 16:30 - 18:30, Room: RB 116 ID: 54David PROCHAZKA (University of Economics, Prague)Development of Financial and Management Accounting Systems of CzechCompanies after the IFRS AdoptionTraditionally, management and financial accounting were two relativelyindependent information systems. Recent progress in the business environmentof developed countries leads to a gradual intergrowth of these two originallyseparate systems into one integrated structure. Specific situation occurs intransitional countries in the Central and Eastern Europe. Financial reporting ofthese countries is heavily influenced by tax legislation, which impairs theusefulness of financial statements for external users. Entities are forced toremove those lacks in management accounting in a great extent to obtain usefulinformation for the internal decision-making. A separate coexistence ofmanagement and financial accounting is then inevitable. The IFRS adoption hasincreased the quality of financial reporting in transitional countries, despitesignificant implementation costs. To lower the cost burden, the IFRS arebecoming the leading principles of management accounting. The paper assumesthat the IFRS may be a special driver for the convergence of financial andmanagement accounting in transitional countries and supports this assumptionby empirical questionnaire survey among selected Czech companies.3-1/1 Friday, 9:00 - 11:00, Room: RB 112 ID: 32Fito ANGELS (UNIVERSITAT OBERTA DE CATALUNYA), Soledad MOYA, NeusORGAZConsidering the Effects on Operating Lease Capitalization on Key Financial RatiosCurrent IFRS accounting regulation does not require capitalization of operatingleases. However, this may change once the new IASB proposal is published.Relevant Spanish companies have been lobbying strong for the delay or even thecancellation of the proposal. In this paper we assess the potential impact thatwould be derived from operating leases capitalization. We have built on theconstructive capitalization method as the basis for our analysis but we have alsorun the tests with the factor method. Results show how the impact on financialratios is statistically significant. When the sector is considered, retail and energyshow to be most affected. We also find a positive relationship between size,ratio variation and retail sector membership. Our results answer to the questionof why Spanish companies show themselves against this proposal. This study isan ex ante research and can not go beyond the effect analysis of this newstandard32 8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012

3-1/2 Friday, 9:00 - 11:00, Room: RB 112 ID: 40Fabian ECHTERLING (University of Bamberg), Brigitte EIERLEA Research Note on Sorting Based Beta Adjustments used in Business ValuationPractice: A Laboratory-Simulation ApproachAccording to Ibbotson Associates (2010, p. 76-77) one of the mostrecommended adjustments for the equity cost of capital in business valuationpractice is the sorting-based Blume (1971)-Adjustment. Even though sortingstocks into portfolios is "standard" in the academic literature (Fama and French(2004, p. 31)) this approach has been criticised in research papers (Berk (2000),Liang (2000)). Though, the resulting measurement error or rather the errors invariables problem in particular is well known in the empirical literature of assetpricing model testing, there is little awareness on its impact when being used forbeta adjustments in business valuation practice. In this article we theoreticallyanalyse the commonly recommended Blume (1971)-Adjustment and show thestatistical impact of the measurement error on observed mean reversion effectsof the risk factor (beta shifts). By simulation we create a virtual dataset of stockswith predefined fixed underlying betas so that the linear form of the CapitalAsset Pricing Model (CAPM) holds by definition. Using this virtually createddataset we apply common sorting techniques and are able to derive adjustmentformulas similar the one suggested by Blume (1971). This indicates that majorparts of observed mean reversion effects can purely be statistically driven andmay not have a real economic reason. Therefore, sorting-based betaadjustments commonly recommended for business valuation practice mayproduce misleading results.3-1/3 Friday, 9:00 - 11:00, Room: RB 112 ID: 56Jan MARTON (University of Gothenburg), Emmeli RUNESSONJudgment in accounting The case of credit losses in banksPrinciples-based accounting standards require the application of professionaljudgment in the production of financial statements. In recent years, the benefitsof such judgment has been debated, for example in relation to fair valuemeasurement. An accounting area where estimates are of particular signficanceis that of credit losses in the banking sector. In this paper, we evaluate theincurred loss model under IFRS - an accounting area characterized by relativelyfew estimates compared to the expected loss model. We find that onlyrecognizing incurred losses decreases the validity of loan loss provisions andthus has a negative effect on the quality of accounting for credit losses in banks.This indicates that the expected loss model would work better to prevent orreduce negative effects of financial crises. There are consequently important8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012 33

implications for the IASB as it deliberates whether to adopt the more principlesbasedexpected loss model.3-2/1 Friday, 9:00 - 11:00, Room: RB 113 ID: 29Olga FERRARO (University of Calabria), Stefania VELTRIExamining the incremental value relevance of as reported other comprehensiveincome in the Italian Stock ExchangeThe main aim of the article is to test whether the Other Comprehensive Income(OCI) is incrementally value relevant for investors with regards to net income.We tested the incremental value relevance (VR) of as reported OCI. The modelused is a modified version of the Ohlson model (1995), which include dividends,as the Italian context is a dividend-focused environment. The sample isconstituted by the all non-financial listed companied to the Italian StockExchange for the 2008-2009 two-year period. The authors found evidencesupporting the hypothesis that as reported OCI numbers are incrementally valuerelevant for investors as regards net income.3-2/2 Friday, 9:00 - 11:00, Room: RB 113 ID: 45Finn SCHOELER (University of Aarhus)Voluntary disclosing cash flow statement in non-listed medium sized companies.In Denmark, like some other EU Member States, medium-sized companies arerequested to present a cash flow statement, but there are exemption rulessimilar to those for subgroups exemption to their presentation of consolidatedfinancial statements. In a sample consisting of the paper versions of annualreports from 385 Danish non-listed medium-sized companies who weredisclosing a cash flow statement as part of their annual report, we found that ina few cases, the companies were exempted to presentation of consolidatedfinancial statements, but disclosing the cash flow statement voluntarily!Since there has been some debate between IASB and the EU Commissionwhether the cash flow statement should be a mandatory part of the annualreporting for non-listed medium-sized companies, we found it interesting todirectly ask these voluntary disclosing companies as to their motivation. For thisreason we conducted a multiple-case study, where we formulated a structuredquestionnaire and made partly open-ended interview with each one of the casecompaniesaccountably responsible persons, i.e. one of the guys who signed theannual report.Among the majority of the answers we found a common understanding onpresenting the cash flow statement because of some tradition, and not because34 8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012

of some clear intention of fulfilling user needs. However, do we really get abetter annual report if a cash flow statement is included?3-2/3 Friday, 9:00 - 11:00, Room: RB 113 ID: 53Michael SCHOLZ (Goethe University), Guenther GEBHARDTThe Usefulness of Direct Cash Flow StatementsCash flow statements present information about cash receipts and paymentsrelated to operating, investing and financing activities. Most accountingstandards allow either the direct method, i.e. presentation of gross cash receiptsand payments, or the indirect method, i.e. reconciling net income to net cashflow, for presenting cash flows from operating activities. We outline differentapproaches to determine the necessary information for the preparation of thecash flow statement. In particular, we show that a specific method of presentingcash flows does not require a specific approach for determining cash flows.The 2010 Staff Draft of the IASB/FASB financial statement presentation projectrequires the direct method of presentation. Preparers criticize this proposal astoo costly and argue that a direct presentation would reduce the reliability ofcash flow statements. We discuss these concerns and provide empiricalevidence from Australian companies which previously were required to presentdirect cash flow statements under AASB 107. When they were offered thechoice between the direct and the indirect method, only a few Australiancompanies switched to the indirect method. We further analyze the detail ofpresentation in direct cash flow statements and find that the level ofaggregation is generally high. Findings from a review of related academicresearch imply that even information at this high level of aggregation leads tobetter predictions of future firm performance and to more value relevantfinancial statements.3-3/1 Friday, 9:00 - 11:00, Room: RB 114 ID: 49Jill COLLIS (Brunel University London), Hannu OJALA, Lasse NIEMI, JuhaKINNUNEN, Pontus TROBERGCapital structure as a determinant of voluntary audit in micro-companies and theimpact on earnings qualityWe investigate capital structure as a determinant of voluntary audit in microcompaniesand the impact on earnings quality. The study is a natural experimentof companies before and after audit exemption was introduced in Finland,where a rich data set for the population of very small companies is available. Wefind that the likelihood of voluntary audit is higher in companies that areprimarily funded by trade credit or external debt finance than in companies8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012 35

funded by owners equity. Using difference-in-differences tests around theregulatory intervention in which we control idiosyncratic characteristics ofmicro-companies, our empirical results do not provide evidence to supportimproved earnings quality for micro-companies choosing voluntary audit. Ourresults should be of interest to regulators in connection with the ECs proposalfor micro-entities, where there is little empirical evidence to assist policymakers.3-3/2 Friday, 9:00 - 11:00, Room: RB 114 ID: 63Michael JONES (University of Bristol), Carmen GRABSCH, Jill SOLOMONAccounting for biodiversity in crisis2010 was the International Year of Biodiversity, emphasising the urgent need toprotect and enhance global biodiversity, given the current biodiversity crisis.Companies have a direct impact on biodiversity through their operations as wellas an indirect impact through their contribution to climate change. Manycompanies discharge their accountability to the environment via sustainabilityreporting, however to date no study has focused specifically on corporatebiodiversity reporting. In this paper we analyse the sustainability (or equivalent)reports of the largest 100 companies listed on the UK stock exchange to gaugethe extent to which they are reporting biodiversity-related information. Ouranalysis indicates that just over half of our UK sample companies report onbiodiversity with the mining and energy companies disclosing the majority of theinformation. Reporting companies focus on information relating to biodiversityaction plans and mission statements, partnerships with external organisationsand site-specific illustrations. However only a few companies list specific species.Few companies report the ways in which biodiversity represents a material riskwhich requires management. Overall, the reporting appears to beanthropocentric, focusing on ecosystem services and does not appear to bebased on the intrinsic value of species.3-3/3 Friday, 9:00 - 11:00, Room: RB 114 ID: 36Hana BOHUSOVA (MendelU), Patrik SVOBODAWine industry reporting: Is it necessary to develop special treatment for wineindustry reporting?Agricultural activity differs from other activities carried out by enterprises toachieve the profit. In comparison with other activities of business subjects it isdependent on the natural and environmental conditions. Agricultural activity hasvery heterogeneous characteristics due to the great diversity of activities that itincludes. Wine industry is a special activity within the scope of agriculture. It36 8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012

faces difficulties to fit in with the traditional accounting framework. The papershould contribute to the development of special approach to wine accounting.Within the framework of theoretical background, the comparative analysis ofcurrently applied rules for agricultural activity especially for wine industry wasdone. There were selected some accounting systems for the comparativeanalysis. There is a special treatment for Agriculture in IAS/IFRS concerningbiological assets and agricultural production. Biological assets are measured atthe fair value less estimated cost to sell for the initial recognition. Subsequentcosts relating to agricultural activity during the biological transformation processare incurred. Some of these costs are capitalized under many national GAAPs,especially those relating to the development of immature plants up toproductive stage. The other expenditures are expenses in the period whenincurred. IAS 41 does not prescribe any treatment for subsequent expenditureson biological assets recording. It is up to decision of management to determinethe way of their recording, or selection of types of costs suitable forcapitalization. Standard IAS 41 - Agriculture does not comprise the methodologyfor the reporting during the biological transformation and the selection of themethod for reporting of biological assets in biological transformation andagricultural produce harvested from biological assets is within the competenceof the accounting unit. It should consider wide range of factors, which caninfluence it decision about the method. As is clear from the above mentionedtext, the accounting unit can apply one of the stated methods for reporting ofagricultural activity.The above mentioned part of the paper served as the basisfor the own research in which the authors are trying to identify specifics of wineindustry within agriculture. More suitable methods for their valuation,recognition and reporting as an alternative to current treatments developmentis the main goal of this paper. The standard philosophy is based on theory thatthe nature of agricultural activity extremely differs from other business activitiesdescribed by other standards (IAS 2 - Inventories, IAS 16 - Property, Plant andEquipment, IAS 18 - Revenue or IAS 11 - Construction Contracts). On the otherhand, the case of bearer assets such as vineyards which have very low residualvalue after their production life is quite different from other types of biologicaltransformation. This kind of biological assets could be considered similar toother property and equipment and the treatment for their recording andreporting could be similar to IAS 16. At the end the results are also confrontedwith contemporary scientific literature on that topic which is not very broad.8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012 37

3-4/1 Friday, 9:00 - 11:00, Room: RB 115 ID: 27Christopher NOBES (Royal Holloway), Erlend KVAALOn improving the measurement of book-tax conformityAtwood, Drake and Myers (2010, hereafter ADM) define book-tax conformity(BTC) as the flexibility of corporate tax calculations to depart from financialreporting. They develop a new measure of BTC by regressing current taxexpense (as a proxy for taxable income) on pre-tax earnings. They apply theirmodel in order to produce BTC scores and rankings for 33 countries for theperiod 1992 to 2005. We think that these are useful contributions. However, inthis paper, we suggest that BTC is not a matter of flexibility, and that it should beseen as the influence of tax on reporting, rather than the other way round. Wenext demonstrate (using the ADM model) that BTC greatly decreased over theADM period, so that the ADM country scores covering the whole period do notreveal an important dimension. We then compute two separate statistics (basedon permanent differences and on deferred tax amounts) for seven countries forthree sub-periods from 1992 to 2009. These two measures pick up differentaspects of BTC, and we show how the rankings of countries vary over time.However, we explain why any numerical measure of BTC needs to besupplemented by qualitative assessments.3-4/2 Friday, 9:00 - 11:00, Room: RB 115 ID: 72Axel HALLER (University of Regensburg), Eva-Maria FERSTLThe Relationship of Financial and Tax Accounting in Germany - A revisit after 20yearsTwenty years ago the article The Relationship of Financial and Tax Accounting inGermany: A Major Reason for Accounting Disharmony in Europe was publishedin the International Journal of Accounting (Haller, 1992). It was the first one thatexplained thoroughly the particular close linkage between financial accountingand tax accounting in Germany, based on the so-called Massgeblichkeitsprinzip(authoritative principle), to the international academic accounting community.Since then the German financial and taxation environment has been changingconsiderably. Therefore it seems to be necessary and beneficial for theinternational academic community to have a closer look at these changes overtime and the current situation of the traditional financial and tax accountingrelationship in Germany.Thus, the objective of the paper is to describe general approaches to connectfinancial with tax accounting, to give a brief historical overview over thedevelopment of the interpretation and scope of the authoritative principle andto explain its recent changes and the current legal situation of the linkage38 8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012

etween tax and commercial accounts in Germany. It becomes obvious that -because of the revised legal rules - it has become very hard for companies toprepare unified accounts, i.e. accounts that meet the financial accounting as wellas the tax accounting rules at the same time. Based on the findings of a recentempirical study, the paper shows that companies nevertheless tend to try toconverge financial with tax accounts. In addition the paper considers how thenew regulatory environment has impacted the effects of theMassgeblichkeitsprinzip that were discussed in the 1992 article. At the end somefactors are mentioned that might have altering influences on the furtherdevelopment of the German specific relationship between financial and taxaccounting.3-4/3 Friday, 9:00 - 11:00, Room: RB 115 ID: 28Felix MADRID (International Olive Oil Council)Developments and challenges in public sector accountingWhat could be dubbed traditional public sector accounting was adequate for thepublic sector as it existed up to the late 1980s. However, the advent ofvertiginous changes called for a substantial shift in approach to the public sectorand hence to public sector accounting standards and procedures.Initially, public sector accounting merely sought to ensure effective control ofpublic funds for which it was sufficient for budget execution to be correctlyrecorded. When it became evident that this type of accounting no longersufficed, attention turned to seeking a role model in business accounting, whichdiffered significantly from public sector accounting, primarily because it uses theaccrual basis as opposed to the cash basis applied by the public system.This move of public sector accounting towards business accounting practicesmaterialised in the International Public Sector Accounting Standards or IPSASsdrawn up by the Public Sector Committee of the International Federation ofAccountants.Despite these moves, some issues still remain unresolved. The accountingtreatment of fixed assets is the question which has perhaps generated the mostliterature in the wake of the R.K.Mautz now-classic paper, Monuments, mistakes and opportunities, in which theauthor put on the table the problem created by assets such as monuments,public buildings, national parks, roads and other assets which generate negativecash flows.Since then, innumerable authors and working groups have investigated theaccounting treatment of such assets which do not exist in business accounting.Although the concept of heritage assets had been incorporated into the IPSASs8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012 39

in an attempt to furnish a solution to this issue, the scope of the relevantstandard still features major exclusions which will gradually have to beeliminated.Administrative concessions and grants are other as yet unresolved issues, againperhaps because of the major differences with regard to the private sector.Much ground has been covered; however, to be modern and effective, publicsector accounting has still to grapple with three important challenges:standardisation and accounting convergence; consolidation of financialstatements; and management indicators and additional information fordisclosure. We are certain that these topics will be analysed in depth in the yearsto come and we trust that a consensus will be reached on the appropriateaccounting treatment.40 8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012

List of Participants1. ALEXANDER David, University of Birmingham, United Kingdom, e-mail: routensyke@btinternet.com2. ANDRE Paul, ESSEC Business School, France, e-mail: andre@essec.fr3. ANGELS Fito, UNIVERSITAT OBERTA DE CATALUNYA, Spain, e-mail: afitob@uoc.edu4. ARCE Miguel, UNIVERSITAT DE VALENCIA, Spain, e-mail:miguel.arce@uv.es5. ARTSBERG Kristina, Lund University, Sweden, BASKERVILLE Rachel, Victoria University of Wellington, NewZealand, e-mail: BLOMKVIST Marita, Halmstad University, Sweden, e-mail:marita.blomkvist@hh.se8. BOHUSOVA Hana, MendelU, Czech Republic, e-mail:uchana@mendelu.cz9. CAIRNS David, University of Edinburgh, United Kingdom, CEUSTERMANS Stefanie, Vrije Universiteit Brussel, Belgium, COLE Vicky, Vrije Universiteit Brussel, Belgium, COLLIS Jill, Brunel University London, United Kingdom, CRISTIAN Carini, Universitu of Brescia, Italy, e-mail:carinic@eco.unibs.it14. DEVALLE Alain, university of Turin, Italy, e-mail:devalle@econ.unito.it15. DRAGONYA Gizella, Heriot-Watt University, Edinburgh, UnitedKingdom, e-mail: gizella.dragonya@gmail.com16. ECHTERLING Fabian, University of Bamberg, Germany, e-mail:fabian.echterling@uni-bamberg.de17. EIERLE Brigitte, University of Bamberg, Germany, e-mail:brigitte.eierle@uni-bamberg.de8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012 41

18. EVANS Lisa, University of Stirling, United Kingdom, FERRARO Olga, University of Calabria, Italy, e-mail:o.ferraro@unical.it20. FERSTL Eva-maria, University of Regensburg, Germany, e-mail: evamaria.ferstl@wiwi.uni-regensburg.de21. FISCHER Jakub, University of Economics, Prague, Czech Republic, e-mail: fischerj@vse.cz22. FORNACIARI Luca, University of Parma, Italy, e-mail:l.fornaciari@libero.it23. FUELBIER Rolf Uwe, University of Bayreuth, Germany, e-mail:rolf.uwe.fuelbier@uni-bayreuth.de24. GROTTKE Markus, University of Passau, Germany, e-mail:markus.grottke@uni-passau.de25. HALLER Axel, University of Regensburg, Germany, e-mail:axel.haller@wiwi.uni-regensburg.de26. HJELSTROEM Anja, Stockholm School of Economics, Sweden, e-mail: anja.hjelstrom@hhs.se27. HJELSTROM Tomas, Stockholm School of Economics, Sweden, e-mail: tomas.hjelstrom@hhs.se28. CHRASCINA Leszek, NWR Carbonia S.A., Czech Republic, e-mail:lchrascina@nwrkarbonia.com29. JARVIS Robin, Brunel University, United Kingdom, JINDRICHOVSKA Irena, VSFS, Czech Republic, e-mail:irena.jindrichovska@mail.vsfs.cz31. JIROUSEK Radim, Faculty of management, VSE, Czech Republic, e-mail: jirousek@fm.vse.cz32. JONES Michael, University of Bristol, United Kingdom, JORISSEN Ann, University of Antwerp, Belgium, 8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012

34. KAIMOVA Nadira, VSE, Czech Republic, e-mail:kaimovanadira@gmail.com35. KAJUTER Peter, University of Muenster, Germany, e-mail:peter.kajueter@wiwi.uni-muenster.de36. KOBLIC Petr, Prague Stock Exchange, Czech Republic, e-mail:durajova@pse.cz37. KRIZ Petr, Fédération des experts comptables Européens, CzechRepublic, e-mail: KUBASCIKOVA Zuzana, University of Economics Bratislava, SlovakRepublic, e-mail: kubascikova.zuzana@gmail.com39. KUBICKOVA Dana, VSFS Praha, Czech Republic, e-mail:dana.kubickova@centrum.cz40. KUMAGAI Shigekatsu, Rikkyo University, Japan, LUNDESGAARD Jon, Hedmark University College, Norway, e-mail:jon@lundesgaard.no42. MADRID Felix, International Olive Oil Council, Spain, e-mail:madrid.felix@gmail.com43. MARTIN Richard, ACCA, United Kingdom, e-mail:richard.martin@accaglobal.com44. MARTON Jan, University of Gothenburg, Sweden, MASSOUDI Dianne, University of Western Australia, Australia, MATONTI Gaetano, University of Salerno, Italy, e-mail:gmatonti@unisa.it47. MEJZLIK Ladislav, University of Economics, Prague, Czech Republic,e-mail: lmejzlik@vse.cz48. MOYA Soledad, EADA BUSINESS SCHOOL, Spain, e-mail:smoyag@eada.edu49. MUELLER Maximilian, WHU - Otto Beisheim School ofManagement, Germany, e-mail: maximilian.mueller@whu.edu50. MUCHOVA Lucie, Pivovary Staropramen A Molson Coors Company,Czech Republic, e-mail: lucie.muchova@starbev.com8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012 43

51. NEDVIDEK Vaclav, VSE, Czech Republic, e-mail:vnedvidek@seznam.cz52. NOBES Christopher, Royal Holloway, United Kingdom, NOVOTNY Jan, University of Economics, Prague, Czech Republic, e-mail: jan.novotny.mail@gmail.com54. OJALA Hannu, Aalto University, Finland, e-mail: hannu.ojala@aalto.fi55. PAANANEN Mari, Brunel University, United Kingdom, PELAK Jiri, University of Economics, Prague, Czech Republic, e-mail:pelak@vse.cz57. PELGER Christoph, University of Cologne, Germany, e-mail:pelger@wiso.uni-koeln.de58. PROCHAZKA David, University of Economics, Prague, CzechRepublic, e-mail: prochazd@vse.cz59. RITZER-ANGERER Petra, Otto-Friedrich-Universitaet Bamberg,Germany, e-mail: petra.ritzer-angerer@uni-bamberg.de60. ROUBICKOVA Jaroslava, University of Economics, Prague, CzechRepublic, e-mail: roubicko@vse.cz61. RUDOLFOVA Lucie, University of Economy Prague, Czech Republic,e-mail: lucie.rudolfova@atlas.cz62. SACCON Chiara, CA FOSCARI UNIVERSITY OF VENICE, Italy, e-mail: csaccon@unive.it63. SCALTRITO Davide, University of Turin, Italy, e-mail:davide.scaltrito@unito.it64. SERVALLI Stefania, University of Bergamo (Italy), Italy, e-mail:servalli@unibg.it65. SCHOELER Finn, University of Aarhus, Denmark, e-mail: fsc@asb.dk66. SCHOENING Stephan, WHL Graduate School of Business and Econ,Germany, e-mail: stephan.schoening@whl-lahr.de67. SCHOLZ Michael, Goethe University, Germany, e-mail:mscholz@wiwi.uni-frankfurt.de68. SKALOVA Jana, University of Economics, Prague, Czech Republic, e-mail: jana.skalova@tpa-horwath.cz44 8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012

69. SKERLIKOVA Tatiana, Vysoka skola ekonomicka v Praze, CzechRepublic, e-mail: tatiana.skerlikova@gmail.com70. SMIDOVA Jekaterina, University of Economics, Prague, CzechRepublic, e-mail: ekaterinab@seznam.cz71. SOEDERLUND Karolina, Abo Akademi University, Finland, e-mail:karolina.soderlund@abo.fi72. TOMSIK Vladimir, Czech National Bank, Czech Republic, e-mail:Vladimir.Tomsik@cnb.cz73. TUMPACH Milos, University of Economics in Bratisalva, SlovakRepublic, e-mail: tumpach@euba.sk74. VACHA Petr, Ernst null, Czech Republic, e-mail:vacha.123@seznam.cz75. VALASKOVA Mariana, University of Economics, Prague, CzechRepublic, e-mail: mariana.valas@gmail.com76. VOETS Christina, University of Muenster, Germany, e-mail:20chvo@wiwi.uni-muenster.de77. WALTON Peter, ESSEC Business School, France, e-mail:walton@essec.fr78. WUESTEMANN Sonja, European University Viadrina, Germany, e-mail: wuestemann@europa-uni.de79. ZAROVA Marcela, University of Economics, Prague, Czech Republic,e-mail: zarova@vse.cz80. ZOUHAR Tomas, University of Economics, Prague, Czech Republic, e-mail: zouhart@vse.cz8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012 45

Notes46 8 th Workshop on European Financial Reporting, Prague September 6 – 7, 2012

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