Ana Isabel Morais

Accounting quality and the adoption of IASB standards: portuguese evidence

Through rule 1606/2002 by the European Commission, Portuguese listed firms were required to adopt IASB standards in the preparation and presentation of consolidated accounts for the periods beginning on or after 2005. IASB standards are developed in environments where accounting practices are especially directed at the private sector, reporting rules are largely unaffected by taxation requirements and capital is traditionally raised in public markets. However, in Portugal, financial reporting is closely related to tax reporting and banks play a key role in providing finance and inside access to information. We investigate whether adopting IASB standards is associated with higher earnings quality and higher value relevance. We compare the earnings quality and value relevance of accounting data of 34 Portuguese listed firms before (1995-2004) and after (2004-2005) the adoption of IASB standards. We find that firms, during the period when they adopt IASB standards, report less smooth earnings than those firms in periods when they adopted national accounting standards, which seems to suggest an improvement in earnings quality. However, we also find that the value relevance of accounting information decreases with the adoption of IASB standards.

Actuarial Gains and Losses: the Choice of the Accounting Method

IAS 19: Employee Benefits (2004) enables a choice between three accounting methods of recognising actuarial gains and losses: profit or loss, equity and corridor methods. The objective of this paper is to identify the accounting method of actuarial gains and losses followed by companies after the mandatory adoption of International Accounting Standards Board (IASB) standards. Information was collected about that accounting method adopted by 523 European companies, in the first year of mandatory IASB standards adoption. It was found that most of European companies included in the sample adopted the corridor method or the equity recognition method. The results also show that the equity recognition method is more used in the United Kingdom (UK) and Ireland and the corridor method is more used by financial companies.

Recent developments in social and environmental accounting research

Purpose - The last years have witnessed a growth in interest in social and environmental questions. Many companies have developed environmental management and auditing systems and altered their social and environmental disclosure practices. These developments resulted in the growth of research focusing on the analysis of information disclosed by companies. The purpose of this study is to contribute a reflection on the papers that have been published on social and environmental accounting from 2000 to 2006. Design/methodology/approach - A literature review of the papers examining social and environmental matters published in selected accounting journals allows the identification of the key content issues, methodologies and research questions which have been predominant in the social environmental accounting research (SEAR) area. It also enables one to pin-point areas for future research. Findings - The content was examined and classified in four groups: social and environmental accounting systems; social and environmental disclosures; regulation impact; and relations among environmental disclosure and environmental performance. For each group, the research method; data origins and type of data; industry and country were identified. Almost all the studies are based on content analysis and interviews. Data are collected not only from the financial statements but also from other types of information disclosed by companies. In many cases, industry activities are selected carefully and most of the studies used data from the UK, Australia, and the USA. Originality/value - The paper provides a contribution to the development of the SEAR area, exploring different views. It also helps schools to identify areas for future research.

Sustainability strategies of the company TimorL: extending the applicability of legitimacy theory

Purpose – This study aims to identify the legitimacy strategies employed by one of the largest Portuguese cement companies to defend and downplay its sustainability performance and activities related to two major controversies involving the company: co‐incineration and the location of the Outao plant.Design/methodology/approach – A single case study methodology is employed for the empirical research. Sustainability reports were analysed in order to identify TimorLs sustainability disclosure practices, and semi‐structured interviews were conducted to complement the case analysis. This paper emphasises legitimacy theory and legitimacy repair strategies that were identified by Suchman.Findings – Legitimacy strategies, including “don’t panic”; “create monitors”; “justify”; “disassociate” and “explain”, were identified in the actions TimorL took after the above‐mentioned controversies. The company initiated a series of actions to respond to the companys “crisis”. The conclusions of the study support the argu...