Leandro Cañibano

Evaluating the statistical significance of de facto accounting harmonization: a study of European global players

Two different forces are involved in the international harmonization of accounting: institutional endeavours to harmonize accounting internationally by developing common accounting rules and reporting standards, and spontaneous efforts by ‘global players’ to adopt accounting methods that will improve communication with users in other countries. These two developments are proceeding side by side, generally reinforcing one another but occasionally moving independently. This paper is primarily concerned with the process of harmonization of financial accounting within the European Union. The hypothesis we want to test is that, in spite of the obstacles to the harmonization of regulations in the European Union, there has been greater conformity in recent years in the accounting practices of companies which operate on the international stage. If so, the implications for the harmonization strategies of the international bodies are important. In this study, we first carry out a critical analysis of previous research on accounting harmonization, summarizing the methods used in empirical studies of de facto harmonization and the results obtained. We note that the major deficiency in the index-based methods of measuring harmonization is that no test of significance has been included in prior research. In this paper, we propose a bootstrapping test of the C index as a way of measuring the significance of the change in its value. We consider a sample of eighty-five ‘global players’ from thirteen countries and we analyse their financial statements with regard to four accounting issues (deferred taxation, goodwill, leasing and foreign currency translation), providing estimates of the significance of de facto accounting harmonization for the periods from 1991–2 to 1996–7.

Shortcomings in the Measurement of Innovation: Implications for Accounting Standard Setting

Innovation is nowadays a fundamental determinant of value creation in business companies and economic growth. Therefore, the measurement of innovation has become a significant concern both for business companies and governments. Traditionally, attempts to measure innovation have adopted a macroeconomic approach, as they have been largely based on broad surveys. However, no attempt has been made to date in order to complement the information provided by such surveys with aggregated data obtained from the financial reports of individual companies. This paper analyses the conceptual and methodological problems underlying the measurement of business innovation by means of surveys and discusses the lack of ability of accounting standards to accurately reflect innovative activities in the financial statements of business firms.In the light of the evidence provided by the empirical studies published to date, we analyse the Spanish situation by reviewing innovation studies conducted by the National Institute of Statistics (INE), and assessing the relationship between the value relevance of accounting information and the firms technological level. Our results suggest that both, micro- and macroeconomic approaches towards the measurement of innovation have significant shortcomings. Thus, a joint effort seems to be needed in order to overcome the methodological limitations affecting innovation studies based on surveys and those relying on financial accounting information. Despite their limitations, surveys provide a sound basis for the identification of trends, key factors and explanatory variables. On the other hand, financial statements could provide a sound basis for the measurement of innovation if they included more relevant information on the intangible determinants of the value of companies. This has obvious implications for the standard setting process.

Intangibles in universities: current challenges for measuring and reporting

Purpose – The purpose of this paper is to discuss whether the mechanisms used to measure and manage intangibles in companies can be applied to universities and other research institutions. Design/methodology/approach – The characteristics of the issues is addressed by companies in relation to their intellectual capital (IC) and how they manage them are reviewed to discuss whether universities can apply the same framework. External pressures for change and barriers universities encounter, particularly due to the current governance system, are discussed. The experience of some universities are briefly described. Findings – The companies’ framework is possible to be used by universities, with some specificity. Research limitations/implications – The number of universities actually applying this framework is small and therefore the results cannot be generalized. Practical implications – Policy measures are needed to encourage research institutions and universities to measure and manage their IC. In a knowledge-based society, the main knowledge producers should be more accountable for their activities. Originality/value – The use of IC concepts to analyze universities’ performance is still scarce. This is an attempt to fill such lacuna.

The Impact of the Spanish Financial Act (44|2002) on Audit Quality

ABSTRACT This study examines the impact of the Financial Act 44|2002 (FA henceforth) on audit quality in Spain. Our goal is to provide empirical evidence on whether the audit reforms recommended by the EU and introduced under the FA actually result in higher audit quality. These audit reforms introduce rules and actions to reinforce auditor independence and competence and thus, incentivise audit quality. The public oversight body for the audit profession (the Institute of Accounting and Auditing—ICAC) and the main professional audit body (the Spanish Institute of Chartered Accountants—ICJCE) maintain the view that the changes ensure and increase audit quality (Fernández and Combarros, 2002; Atarés and Canales, 2004). However there is no empirical evidence to support this argument. We empirically test the effect of the FA on audit quality by assessing the ability of auditors to constrain opportunistic earnings management practices. We use data from Spanish companies for the pre- and post-FA periods 2000–2001 and 2003–2004 respectively. The study shows that audit quality has increased after the FA. These results support European recommendations on questions regarding audit regulation.

El control institucional de la información financiera: aplicación de un estudio DELPHI

RESUMEN Este trabajo tiene como propósito el estudio de uno de los mecanismos de enforcement de las normas de información financiera que supone la línea de defensa externa de las mismas: el control institucional. Los escándalos empresariales acaecidos en los últimos años golpearon seriamente la confianza de los stakeholders, hechos que unidos a otras circunstancias nuevas del entorno, entre ellas la aplicación obligatoria de las Normas Internacionales de Contabilidad/Normas Internacionales de Información Financiera (NIC/NIIF), pusieron de relieve la necesidad de reforzar más la eficacia de los controles sobre la transparencia informativa; la reacción de los gobiernos y otras entidades reguladoras ha desembocado en la publicación de un maremagno de reformas. En este sentido, tras una sucinta revisión de las iniciativas en el ámbito de la Unión Europea (UE), se lleva a cabo un estudio empírico utilizando el método Delphi. Su objetivo consiste en identificar y explorar la perspectiva de los que elaboran la información financiera (empresas) y los que la revisan en primera línea (auditores), procedentes de dos países de la UE (España y Portugal). Los resultados concitan las apreciaciones de empresas y auditores sobre los intentos de reforzar los controles de la información financiera, permitiendo dibujar las líneas de un modelo de control institucional que reúne sus preferencias.