The conservatism as a cultural value that underlies the financial reporting: Empirical evidence from listed companies in European regulated markets

Fabio Albuquerque,Maria Do Rosário Fernandes Justino,Nuno Rodrigues,Joaquín Texeira-Quirós

doi:10.22201/fca.24488410e.2018.1673

Fabio Albuquerque, Maria Do Rosário Fernandes Justino + Show 2 more

Open Access

https://doi.org/10.22201/fca.24488410e.2018.1673

Copy DOI

Abstract

This paper intends to assess the existence of confirmatory variables of conservatism based on the disclosures made in the financial report. Data were collected from the annual accounts for 2013 and 2014 disclosed by 137 listed entities (non-financial groups) in the European Union (EU) stock indexes: Portuguese Stock Index (PSI)-20, Iberian Index (IBEX)-35, Financial Times Stock Exchange (FTSE)- 100, German Stock Index (DAX)-30 e Stockholm Stock Exchange (OMX)-S30. The content analysis was used as a methodology. After applying multiple linear regression models, the findings indicate that the assessment of the conservatism based on relevance is consistent with the associations suggested in the literature. One of the main contributions of this research is the consideration of the impact of culture on financial reporting, namely through the proposal of a new proxy for the measurement of conservatism based on the financial report.

Highlights

The progressive integration of financial markets has made inevitable the progressive integration of accounting practices and regulations at the international level (Ball, 2006)
Data were collected from the annual accounts for 2013 and 2014 disclosed by 137 listed entities in the European Union (EU) stock indexes: Portuguese Stock Index (PSI)-20, Iberian Index (IBEX)-35, Financial Times Stock Exchange (FTSE)100, German Stock Index (DAX)-30 e Stockholm Stock Exchange (OMX)-S30
The widespread adoption of International Financial Reporting Standards (IFRS), which are considered principle based standards, contrary to rules-based standards issued by the Financial Accounting Standards Board (FASB), reinforces the importance of analyzing the impact of professional judgment on financial reporting by different stakeholders, especially preparers and auditors

Summary

Introduction

The progressive integration of financial markets has made inevitable the progressive integration of accounting practices and regulations at the international level (Ball, 2006). The widespread adoption of IFRSs, which are considered principle based standards, contrary to rules-based standards issued by the Financial Accounting Standards Board (FASB), reinforces the importance of analyzing the impact of professional judgment on financial reporting by different stakeholders, especially preparers and auditors. Those aspects should not be overlooked either by regulatory or standard-setting bodies in accounting matters, acting locally or internationally. It should be noted that the different interests of the stakeholders, reflected in the financial report, together with divergent cultural patterns, contribute to the existence of divergences that directly influence the international accounting convergence procedure

Objectives

Methods

Results

Conclusion