Consolidated Financial Statements Research Articles

A Mathematical Model of Foreign Trade Enterprise Consolidated Financial Statement

Consolidated financial statements can reflect the comprehensive financial position and operating results of foreign trade enterprise group, reasonably determines the merger range of consolidated financial statements which is the key foundation work of preparing consolidated statements. In view of the problem that there is no specific provision of substantial control concrete measurement method of current new accounting standards, the paper takes nine enterprises of Shanghai with unclear merge reasons as sample enterprises. With their financial report from 2009 to 2011 as data sources, panel data model is applied to analyze the influence of merge scope change on sample enterprise book performance. The results show that the consolidated range changes may improve enterprise book report data, and the average value of book achievement influence is about 5.43%.

Effects of the IFRS On Financial Communication in Italy: impact on the consolidated financial statement

A fundamental step for European companies towards accounting harmonisation was the issue of Regulation no.1606 dated 19th July 2002 in which the European Union obliges listed companies to draw up their consolidatedfinancial statements as from 2005 according to the principles of the International Accounting Standards Board(IASB).For Italian companies in particular, introduction of the International Financial Reporting Standards (IFRS) willinvolve important changes as it will impose modifications on the accounting culture with consequences not only atoperating but also at organisational level: efforts in terms of time and resources employed will therefore beconsiderable.The topic is therefore of great relevance today and can be tackled from different aspects.One of the areas considered most critical is understanding of the effects and changes (deriving from introduction ofthe IFRS) in terms of financial communication and assessment of financial performances for companies subject tothe process of harmonisation.As the main aim of the study, we have therefore chosen to analyse and focus attention on the above effects withspecific reference to construction of the consolidated financial statements of listed Italian parent companies at thehead of non-financial groups in particular.

The value relevance of consolidated financial statements in an emerging market

Purpose – India is one of the few countries where companies are required to give both consolidated financial statements (CFS) as well as parent‐only financial statements. While parent‐only statements have been in existence for a long time, CFS was introduced recently. The purpose of this paper is to examine the value relevance of CFS in India.Design/methodology/approach – The value relevance of CFS is examined through an empirical study. The study examines the relationship between market values and consolidated earnings and parent‐only earnings is analysed. The study uses four years data of 59 companies whose subsidiary earnings are more than 20 per cent of consolidated revenue.Findings – Initial results show that annual CFS are not value relevant, whereas annual parent‐only financial statements are value relevant. However, wherever quarterly financial statements are available, CFC are found to be value relevant and parent‐only financial statements are not value relevant.Practical implications – While CFS...

Why Do Private Firms Adopt IFRS?

Do private firms voluntarily adopt IFRS? If so, why? Answer to these questions have been very limited so far, mainly due to the absence of financial data on private firms. In this paper, I exploit the German setting where the financial statements of private firms are comprehensively available. I estimate multi-period logit regressions on the choice between national GAAP and IFRS for the consolidated (or group) financial statements of 3,365 German private firms with more than 14,000 firm-years in the period 1998 to 2009. My results suggest that the expected net benefits of IFRS adoption vary substantially across the group of private firms, depending on their external financing needs, governance system, and organizational and informational complexity. Specifically, I find that private firms are more likely to switch to IFRS if they have more growth opportunities, are more leveraged, are younger, are externally rated, seek to raise external capital by issuing public bonds or equity, are registered as a stock corporation, are characterized by private equity involvement, have more international sales and operations, belong to high-tech industries and have a Big Five auditor. These insights should be of great interest to regulators in the current debate about the future of financial reporting in private firms.

How Transparent Are Companies Listed On The Bucharest Stockexchange When Disclose Them Consolidated Financial Statements?

The main objective of this paper is to examine the level of disclosure regarding the consolidated financial statements in the case of Romanian listed companies. In order to measure this, a multiple index was used that quantifies the level of dislosure a company has achieved. The main conclusion, in accordance with our hypotheses is that the disclosure index is higher in the case of first category of listed entities comparing with the second and third category. This study investigates the disclosure level of Romanian quoted companies over the years 2006- 2009 concerning the consolidated financial stetements. The sample includes all financial and nonfinancial companies whose securities were listed during this period. Data were collected from their published consolidated financial statements on CNVM site and cross-validated with information available on them website. The year 2006 was chosen as the starting point for our analyses because it marks the beginning of mandatory requirements for Romanian quoted entities to disclose the consolidated financial statements. The period analised marks the pre and post Romania accession to the European Union. The results reveal that there is a positive association between disclosures the consolidated financial statements and the of quoted entities, comparable to the conclusions reported by studies conducted on more mature markets. The dislosure level is higher for categories I quoted entities then for the category II, accordingly with the segmentation of the BSE. This paper provides several contributions to the accounting literature. First it adds to the knowledge of transition economies in general and those of Eastern and Central Europe in particular by considering a market which has not been examined before. To our knowledge, it is also the first study that analizes the consolidated financial statements disclosure for Romanian quoted entities. and the evolution of harmonization process concerning the disclosure of consolidated financial statements, and for each year the degree of material disclosure harmonization. More fundamentally, this research contributes to the literature on financial reporting by showing that the relationship between financial reporting disclosure and financial market segmentation is comparable to those observed in more favorable environments. It also clearly highlights the influence of segmentation imposed by the market on the association between the importancy given by the quoted entities to disclose accounting data and the entities value. The paper is structured as follows. Section 2 provides a short overview of the legal framework, Section 3 presents the Romanian institutional setting, in particular the BSE and its regulatory environment. Section 4 present a literature review, Section 5 describes the data and the

Improving Creditor Protection through IFRS Reporting and Solvency Tests

Accounting-based capital maintenance is a traditional feature of the Continental-European system of creditor protection, serving as a correlative of the limited liability enjoyed by shareholders of corporations. Due to recent developments at the EU regulatory level, this system has come under intense scrutiny. While capital maintenance and distribution rules are presently tied to individual financial statements prepared under the prudent German accounting rules, recent developments suggest that International Financial Reporting Standards (IFRS) may be finding their way into this traditional system. Since conservative capital maintenance is not the primary objective of these rules, opponents assert that their introduction into German individual accounts may weaken creditor protection. We discuss how creditor protection and accounting rules should interact in the future, proposing a new system primarily for the benefit of corporations preparing (consolidated) financial statements according to IFRS, i.e. for public parent companies to which the IAS Regulation applies directly, and other firms that apply IFRS under national law. Under that system, existing capital maintenance rules would be based on IFRS accounts. In addition, creditor protection would be enhanced by a supplemental, liquidity-oriented, forward-looking solvency test to be conducted prior to each intended distribution.

Implications of the ‘IAS Regulation’ for Research into the International Differences in Accounting Systems

Meek and Thomas (2004) call for research on the continued relevance of ‘rediscovered’ dichotomous accounting classifications. We provide such evidence by examining how developments surrounding the ‘IAS Regulation’ (1606/2002) influenced international differences in accounting systems in the European Union. Since a sufficient time series of actual post-2005 International Financial Reporting Standards (IFRS) reporting practice is not yet observable, we propose an initial re-classification of accounting systems based on evidence available to date, that is, the degree of implementation of the IAS Regulation in the Member States. Consistent with Nobes (1998), we find that the degree of public accountability to outside investors (the ‘public/private’ criterion) is becoming the primary differentiator for accounting systems in Europe, surpassing country-level variables such as legal system and culture. The distinction between consolidated and individual financial statements is the second emerging differentiator. While consolidated accounting is becoming more uniform across countries, cross-country cultural differences are most likely to persist in individual accounting. Based on our analysis we highlight two important areas of future research beyond the consolidated financial statements of listed firms (e.g. Nobes, 2005; Schipper, 2005). First, at the country level, the interaction of IFRS and individual financial statements will need to be reassessed. In addition, research could help introduce a degree of differentiation into financial reporting regulation for unlisted firms, because these firms are not a homogeneous group. Also, the convergence of national GAAP systems with IFRS will benefit from fresh research insights. Second, at the firm level, future research could analyze the extent to which the determinants and consequences of IFRS adoption, an area well researched for publicly traded firms (e.g. Cuijpers and Buijink, 2005), generalize to unlisted firms. Such research will help detect emerging patterns of accounting systems within an international context. It will generate insights into the disconnect of consolidated accounts from national influences, the degree of uniformity of consolidated accounts among international firms, the continued relevance of traditional classifications of international accounting systems for individual accounts and accounts of unlisted companies, and the convergence of national standards with IFRS.

BOOK REVIEWS

Book reviewed in this article:Ray Ball, Philip Brown, Frank J. Finn and R. R. Officer (editors), Share Markets and Portfolio TheoryWalter L. Burke, E. Bryan Smyth and John S. Macmullen, Accounting for ManagementAustralian Accounting Research Foundation, Discussion Paper No. 2, The Funds Statement, by R. C. CliftS. H. Archer, G. M. Choate and G. Racette, Financial Management: An IntroductionDonald A. Leslie, Albert D. Teitelbaum and Rodney J. Anderson, Dollar‐Unit Sampling ‐ A Practical Guide for AuditorsAustralian Society of Accountants, Bulletin No. 22, Further Contributions to Current Cost AccountingB. H. McPherson, The Law of Company LiquidationAustralian Accounting Research Foundation, Accounting Research Study No. 8., Accounting for Long Service LeaveCurrent Cost Accounting: Reports on Legal Implications and Debenture Stock Trust DeedsBrian Booth, Consolidated Financial Statements and Group Accounts Case Studies