Regulation Of Financial Reporting Research Articles

Financial Reporting Regulation in the Laboratory: A Case on Earnings Management

Financial Reporting Regulation in the Laboratory: A Case on Earnings Management

Accountability in an Independent Regulatory Setting: The Use of Impact Assessment in the Regulation of Financial Reporting in the UK

The growing reliance on non-governmental independent regulators in many social and economic domains, including corporate financial reporting, has brought to the fore concerns over their regulatory accountability. This study looks at one aspect of the regulatory due process-regulatory impact assessment (IA). Drawing on the analytical framework developed by Bovens (Public accountability: a framework for the analysis and assessment of accountability arrangements in the public domain. CONNEX papers, Research Group 2, Democracy and Accountability in the EU, 2006, Eur Law J 13(4): 447–468, 2007), we evaluate the contribution of IA as an instrument for enhancing regulatory accountability in the context of the Financial Reporting Council, an independent regulator for the accountancy profession in the UK. The study’s findings suggest that, despite an increasing level of sophistication in the manner in which IA is used within FRC, the contribution of IA to regulatory accountability remains limited. Specifically, there are concerns as to whether IA is used to achieve a transparent and fair regulatory process or simply to maintain an image of good governance and justify policy decisions that would have been made even in the absence of IA.

Accounting Regulation of Financial Reporting By Small and Medium-Sized Entities with No Public Accountability

Abstract The establishement of uniform rules and principles for the recognition and evaluation, requirements for presentation and disclosure of elements of the financial statements provides global comparability, harmonisation and high quality financial reporting. Taking into account the simpler requirements of small and mediumsized entities in relation to large entities, the International Accounting Standards Board (IASB) has created a financial reporting standard to meet the needs and capabilities of small and medium-sized entities with no public accountability, which, although the reduced volume and simplified requirements, does not diminish the quality or transparency of financial reporting. The author aims to point to the justification of the need to establish a standard for medium and small entities, analyzes its basic characteristics and examines the relations with full standards and EU regulations. Mandatory application of the standard for small and medium entities in the Republic of Serbia is justified, but other conditions are also required for its successful implementation, which are not provided due to the alternative use of national legislation that is incomplete and vague, and inconsistent with the standards, concludes the author.

The Economics of Disclosure and Financial Reporting Regulation: Evidence and Suggestions for Future Research

ABSTRACTThis paper discusses the empirical literature on the economic consequences of disclosure and financial reporting regulation, drawing on U.S. and international evidence. Given the policy relevance of research on regulation, we highlight the challenges with (1) quantifying regulatory costs and benefits, (2) measuring disclosure and reporting outcomes, and (3) drawing causal inferences from regulatory studies. Next, we discuss empirical studies that link disclosure and reporting activities to firm‐specific and market‐wide economic outcomes. Understanding these links is important when evaluating regulation. We then synthesize the empirical evidence on the economic effects of disclosure regulation and reporting standards, including the evidence on International Financial Reporting Standards (IFRS) adoption. Several important conclusions emerge. We generally lack evidence on market‐wide effects and externalities from regulation, yet such evidence is central to the economic justification of regulation. Moreover, evidence on causal effects of disclosure and reporting regulation is still relatively rare. We also lack evidence on the real effects of such regulation. These limitations provide many research opportunities. We conclude with several specific suggestions for future research.

The Economics of Disclosure and Financial Reporting Regulation: Evidence and Suggestions for Future Research

This paper discusses the empirical literature on the economic consequences of disclosure and financial reporting regulation (including IFRS adoption), drawing on U.S. and international evidence. Given the policy relevance of research on regulation, we highlight the challenges with: (i) quantifying regulatory costs and benefits, (ii) measuring disclosure and reporting outcomes, and (iii) drawing causal inferences from regulatory studies. Next, we discuss empirical studies that link disclosure and reporting activities to firm-specific and market-wide economic outcomes. Understanding these links is important when evaluating regulation. We then synthesize the empirical evidence on the economic effects of disclosure regulation and reporting standards, including the evidence on IFRS adoption. Several important conclusions emerge. We generally lack evidence on market-wide effects and externalities from regulation, yet such evidence is central to the economic justification of regulation. Moreover, evidence on causal effects of disclosure and reporting regulation is still relatively rare. We also lack evidence on the real effects of such regulation. These limitations provide many research opportunities. We conclude with several specific suggestions for future research.

New Zealand Financial Reporting Regulation (Presentation Slides)

This set of 45 PowerPoints examines the New Zealand Financial Reporting Regulation, the use of IPSAS for Public Benefit Entities (of which there are many) and IFRS for a few Companies (5% of all, being the largest or listed we guess). From the 1990s both New Zealand and Australia followed a sector-neutral philosophy in relation to financial reporting standards, i.e. there was one set of GAAP requirements for all entities, whether for-profit, public or third sector organisations. For around two decades, New Zealand implemented this sector-neutral approach to accounting standards. Following the 2009 Discussion document produced by the Accounting Standards Review Board – which has now been reconstituted to be the External Reporting Board (XRB), there is now a specific set of International Public Sector Accounting Standards (IPSAS) for Public Benefit Entities (PBEs) and Not-For-Profit entities (NFPs) in New Zealand. There are many more entities using these now than IFRs. NZ IFRS, even with reduced disclosures, are only now used by a small percentage of all companies. What do the large number of other companies use? This set of 45 PowerPoints is used to teach students about these shifts in NZ from relatively few tiers to nine tiers for financial reporting.

Going Round in Circles, or the Spiral of Progress? Financial Reporting Regulation for Government and Public Sector in New Zealand

Going Round in Circles, or the Spiral of Progress? Financial Reporting Regulation for Government and Public Sector in New Zealand

Management Accounting on the Regulatory Agenda? The Transnational and Local Arenas of Financial Reporting Change in Britain

This qualitative study investigates societal and historical settings, which enabled proposals for mandatory narrative reporting on a business' underlying non-financial and future-oriented success factors in an Operating and Financial Review (OFR) to become a key issue on British Company Law reform-agenda in 1998 to 2006. The analysis argues that accounting regulation reform is shaped by a wide range of non-accounting disciplines that intersect with accounting at a certain moment in history. The British accounting reform debates are seen in relation to other national and arenas of discourse to explain how ideas of future-oriented narrative reporting that have been discussed among British accounting professionals for more than 30 years gained momentum in public regulatory activity after further evolution through history. The analysis begins with a review of British proposals for inclusion of accounting narratives in financial reporting-regulation since mid-1970s, and argues that regulatory reform-initiatives in accounting are also shaped by a wide range of non-accounting disciplines that intersect with accounting at a certain moment in history. The study then outlines a locally detached constellation of overlapping problem-discourses in corporate social responsibility (CSR), strategic management, and management accounting in light of new global competition during 1980s, which challenged and expanded commonly agreed notions of appropriate accounting practice to integrated strategic financial and non-financial performance measurement. The translation of this transnational frame of reference into financial reporting regulation reform-proposals is then traced in British accounting reform agents' problem-discourses on financial reporting in mid-1990s. Financial reporting standard setters, corporate governance reformers, and public policy think tanks drew on expanding conceptions of accounting beyond the numbers to address problems of international economic competitiveness and a lack of trust in national corporate governance and financial reporting systems. Their particular critique on traditional financial reporting seemed to parallel relevance lost thesis in management accounting. The study concludes that presentation of non-financial and future-oriented reporting as a solution to bigger problems of international economic competitiveness and a lack of trust in national corporate governance systems stabilised a national constellation of debates in financial reporting, public policy-making, and corporate governance as much that a regulatory space for introduction of mandatory OFR could eventually emerge. The genealogy of OFR as an issue for public regulation provides basis for further examination of dynamics of actors and ideas within a regulatory space over term of British Company Law Review from 1998 to 2006.

Financial Reporting Regulation and the Reporting of Pro Forma Earnings

A primary objective of the Sarbanes-Oxley Act is to bolster public confidence in the U.S. capital markets. The SEC aims to achieve this objective in part by regulating the use of alternate earnings measures (colloquially referred to as “pro forma” earnings) that differ from generally accepted accounting principles. This paper examines whether firms change their reporting practice in response to pro forma regulation. Specifically, it examines whether the use, calculation, and presentation of pro forma measures by S&P 500 companies changes between 2001 and 2003. We document three significant shifts in pro forma reporting in this period. First, the proportion of firms reporting pro forma earnings declines from 77 to 54 percent. Second, by 2003, pro forma is used in a less biased manner. Not only is the proportion of firms using pro forma earnings to increase reported income smaller than in 2001, but also the magnitudes of these increases are reduced. Third, in 2003, firms present pro formas in press releases in a much less prominent and less potentially misleading manner. These results suggest a strong impact of the recent regulation of pro forma reporting and provide important empirical evidence for policy makers.

Corporate Governance and the Regulation of Financial Reporting

Abstract This paper examines the inter-dependent role of corporate governance and financial reporting within the institutional context of listed companies in the UK. Four related issues are addressed: the nature of the current problems of corporate governance, the role of financial reporting as a palliative for these problems, the need to regulate financial reporting if it is to fill this role, and the form which such regulation is likely to take. It is concluded that improvements in financial reporting may be a necessary condition for improved corporate governance, but they may not be sufficient. Improvements in financial reporting are likely to be facilitated by some form of regulation, because of the need to devise a standard form which will aid inter-firm comparisons. Self regulation by professional bodies has emerged as the initial method of regulation, but this is unlikely to be a permanent solution. If the professional body has monopoly power, there will be pressure for a wider form of private sect...

The Economic Effects of Federal Regulation of the Market for New Security Issues

The Economic Effects of Federal Regulation of the Market for New Security Issues