Paola Ramassa

The Pros and Cons of XBRL Adoption in Italy: A Field Study

Our study responds to the call for more field-based research on XBRL focusing on the effects of its adoption with regard to: (i) knowledge and actual direct use of XBRL; (ii) existing limitations and future necessary improvements; and (iii) actual costs and benefits. In pursuit of these objectives, we have carried out a descriptive study based on interviews with different actors involved in the financial communication process in Italy, where the XBRL filing of financial statements has been mandatory for unlisted companies since 2009. Results suggest that five years of adoption have not led to a widespread awareness of XBRL features and potential benefits among professionals. Moreover, interviews highlight that so far the XBRL mandatory adoption has not achieved an overall substantial impact on real practice yet, if we exclude some financial statement users (e.g. financial analysts). Our findings have relevant implications for regulators, users, and companies as well.

Stock Option Plans in Italy: Accounting Treatment, Financial Crisis, and Other Determinants

Many studies on employee stock option plans state that the favorable accounting treatment, even if not declared, has often been one of the main reasons for this form of compensation. According to that view, professionals and scholars forecasted that recognition required by IFRS 2 would imply a reduction in the granting of stock options as incentive means. On the other side, empirical evidence suggests that their widespread adoption cannot be explained by a single view, since many determinants play a role in their issue.In addition to the accounting change, stock options have recently been the target of growing criticism, especially when the financial crisis started to show its effects. That may have an impact not only on incentive effectiveness, but also on outrage costs limiting their use by listed firms.In such a perspective, the main purpose of the paper is to explore the impact of IFRS 2 and of the recent financial crisis on stock option granting. To achieve that objective, our analysis is focused on these external determinants, which will be tested together with other variables indicated by stock option literature (incentive alignment, financial constraints, and tax benefits).The analysis is carried out on the population of Italian listed companies on a ten-year time horizon (2000-2009). That setting is of particular interest to our research questions, since national GAAPs did not require any valuation in annual reports prior to 2005 and results from previous studies highlight a relevant role of external factors in explaining option granting.Empirical evidence suggests that: the mandatory transition to IFRS 2 did not have a significant effect on stock option granting, the issue of stock options is less likely to occur during the financial crisis, and firms with higher growth opportunities have a higher probability to grant stock options.

XBRL Implementation in the European Union: Exploring Preparers’ Points of View

The wide diffusion of XBRL will reach another milestone with the mandatory transition to iXBRL in the European Union. This process involves all listed companies, as ESMA requires iXBRL for companies issuing IFRS consolidated financial statements from 1st January 2020. This paper explores the points of view of preparers, key subjects in identifying the potential drawbacks of XBRL adoption since they are directly involved in the transition. We analyse letters responding to the ESMA 2015 consultation paper and interpret them in the light of previous literature on the topic, also considering the positions expressed by other respondents’ categories. This study contributes to XBRL literature by shedding light on preparers’ positions before the mandatory transition. Additionally, it stresses the gap existing between subjects bearing implementation costs of a communication technology and its end users. We provide insights useful to European policy-makers to improve the process of transition to XBRL. Indeed, findings remark the trade-off between the need for innovation and the necessity to reduce administrative burdens to enhance the competitiveness of European companies. Our analysis could be of interest also for policy-makers of other jurisdictions considering XBRL adoption as well as for companies and consulting firms supporting them in the transition.

Web-Based Financial Reporting: An Interpretative Model for Corporate Communications on Social Media

This paper aims at contributing to financial reporting literature by proposing a conceptual interpretative model to analyse the corporate use of social media for financial communication purposes. In this perspective, the FIRE model provides a framework to study social media shifting the focus on the distinctive features that might enhance web investor relations. The model highlights these features through four building blocks: (i) firm identity (F); (ii) information posting (I); (iii) reputation (R); and (iv) exchange and diffusion (E). They represent key aspects to explore corporate communication activities and might offer a framework to interpret to what degree corporate web financial reporting exploits the potential of social media. Accordingly, the paper proposes metrics based on this model aimed at capturing the interactivity of corporate communications via social media, with a particular focus on web financial reporting. It tries to show the potential of this model by illustrating an exploratory empirical analysis investigating to what extent companies use social media for financial reporting purposes and whether firms are taking advantage of Twitter distinctive features of interaction and diffusion.

Financial Communication of Promises and Results: An Empirical Analysis of Disclosure Integration

There is a consensus that forward-looking disclosure is essential in order to support present and potential investors in their decision-making needs. Corporate financial prospects are mainly disclosed on a voluntary basis, leading to different common practices (in terms of documents and time horizon) from country to country.A large literature has focused almost exclusively on short-term forward-looking disclosures (earnings announcements), which are widely used by listed companies to meet investors’ demand. The present paper shifts the focus on a longer time-horizon in forward-looking disclosure through the analysis of the strategic plan, where listed companies provide very useful information on managements plans, financial forecasts, opportunities, and risks.The topic is investigated in order to improve our understanding of the strategic plan role within corporate financial communication and its connection with periodic mandatory disclosure. Clearly, information availability is not the only issue from a users’ point of view. Some firms, particularly the larger ones, already provide all the information that users need, but many of them provide it in a variety of ways rather than in a comprehensive, integrated format.In such a perspective, the primary purpose of this paper is to explore the connection between strategic plans and annual reports, with particular reference to continuity and comparability of information disclosed through different documents. The study is based on the idea that it is essential that forward-looking disclosure is integrated with data published in annual reports. In such a perspective, integration is reached when investors are able to verify whether the previously disclosed strategic and financial targets has been hit.In pursuit of that objective, the paper advances a proposal for an index to measure integration between forward-looking and past financial disclosures, based on the comparison of data released in strategic plans and in the following annual reports. We posit that financial data published in mandatory reports which is directly comparable to forward-looking information contained in previous strategic plans is an indicator of integration between documents.We examine the topic focusing on the integration of quantitative data disclosed over a five-year period (2004-2008) in the Italian context, which is a very interesting setting due to the wide use of strategic plans.Additionally, we investigate the determinants of integration between disclosures of forward-looking information and results released in annual reports. The analysis is based on a review of empirical literature and takes into consideration four potential explanatory factors: firm size, information asymmetry, proprietary costs, and firm performance.

La produzione scientifica dei docenti italiani di Economia Aziendale. Un’analisi esplorativa nel triennio 2008-2010

The Italian university system is undergoing signicant changes, especially in terms of research evaluation. This evolution is even more significant for disciplines where the systematic analysis of research activity has only recently been introduced (such as Economia Aziendale). In the light of these considerations, the present paper aims at carrying out a first exploratory analysis of research published by Italian scholars of Economia Aziendale over the period 2008-2010. More specifically, the study focuses on research topics, methodology, international perspective and co-authorships with regard to both articles published in national and international journals (Journal Rating AIDEA), and books.

Forward-Looking Disclosure in Italy: An Analysis of Company Announcements

There is a consensus that the disclosure of information with a forward- looking perspective is essential in order to help stakeholders - and especially investors - in forming opinions on corporate performance. Perspectives and forecasts are disclosed through several documents and financial statements, such as IPO prospectuses, annual reports, interim reports and strategic plans.In recent years, Italian researchers have focused their efforts on forward- looking information provided in annual reports and strategic plans. This paper shifts the focus on company announcements, that represent a consolidated research topic in international literature but have been looked at by little research in Italy. They are a very important source of forward-looking information because of their timeliness and because companies have to disclose every kind of price sensitive information through them.The primary purpose of this study is to investigate what kinds of forecast information are disclosed in company announcements. To achieve this objective, announcements issued by a sample of Italian listed companies are analyzed with regard to categories based on the standard format required by the Italian Stock Exchange. A first analysis concerns the kind of announcement which forward- looking information are provided in (e.g. approval of an interim report). Then, forward-looking information provided in announcements are examined with reference to their estimate degree (forecast/objective), the covered topics, the disclosure of quantitative data and of underlying hypotheses.This study represents a preliminary attempt to advance our understanding of forward-looking disclosure with reference to the role of company announcements in corporate communication strategy. It also provides a basis for further research regarding the accuracy and the determinants of forward-looking information.