Peter Fiechter

Determinants and Consequences of a Voluntary Turn Away from IFRS to Local GAAP: Evidence from Switzerland

This paper examines whether current IFRS are too extensive (i.e., costs exceed benefits) for small and mid-cap companies (SMCs). We analyze determinants and consequences of a turn away from IFRS, thereby exploiting a unique feature of the Swiss setting in which listed firms are allowed to switch from IFRS to Swiss GAAP, all else equal. We predict that small firms with high insider ownership are more likely to switch because of a lower demand for public accounting (IFRS) information. To the extent that the supply of information as required by IFRS exceeds the switching firms’ demand for information, we do not predict adverse capital-market effects after a switch. Consistent with predictions, we find that (a) small firms with higher insider ownership and fewer foreign investor holdings are more likely to switch, (b) switching firms substantially reduce their disclosures, and (c) only firms with more dispersed ownership experience a decrease in liquidity after they switch. Overall, our findings are important for standard setters and securities regulators in shaping the (future) reporting requirements for listed firms.

Real Effects in Anticipation of Mandatory Disclosures: Evidence from the European Union’s CSR Directive

In 2014, the European Union (EU) passed a corporate social responsibility (CSR) directive that mandates large listed firms to prepare non-financial reports beginning from fiscal year 2017 onward. We examine whether firms within the scope of the directive (hereafter, “treated firms”) anticipate the disclosure mandate—and related adverse stakeholder reactions—by increasing the CSR activities before the first mandatory disclosures. Consistent with such an anticipatory real effect, our results from a difference-in-differences test document that treated firms on average increase their CSR activities after the 2014 passage of the directive, and that this effect increases with lower pre-directive CSR disclosure levels. Findings from cross-sectional tests further show that the increase in CSR activities is larger for firms with higher expected benefits of the anticipation strategy (higher exposure to stakeholder reactions, stricter expected implementation of the directive, and longer investment horizon). Taken together, our study provides evidence on a specific channel through which CSR disclosure regulation may create real effects: anticipation of adverse stakeholder reactions.

Bold Analysts or Bold Banks: Do Institutional Factors Drive Herding Behavior?

This paper examines the influence of institutional factors on the herding behavior of security analysts. Exploiting a unique dataset on the ownership of brokerage houses, we find that analysts from publicly listed brokers are more likely to issue herding forecasts compared to analysts from privately held brokers. We show that this effect is driven by the group of analysts covering financial sector stocks. In particular, the probability of issuing a herding forecast revision is 4% higher (average marginal effect) for financial sector analysts from public brokers compared to financial sector analysts from private brokers. We interpret this finding as evidence that financial sector analysts from public brokers are less independent, as their forecasts exert an externality on their broker’s stock valuation.

Fair Value: Reporting im fundamentalen Wandel

Das Bewertungskonzept «Fair Value» findet immer haufiger Zugang in das Reporting von Unternehmen. Die beiden Standardsetter International Accounting Standards Board (IASB) und Financial Accounting Standards Board (FASB) treiben diese Ent-wicklung mit den jungst veroffentlichten Regelungen weiter voran. Der vorliegende Bei-trag beleuchtet Wesen und Problematik von Fair Values im Reporting und analysiert die praktische Umsetzung des Fair Value-Bewertungskonzepts am Beispiel ausgewahl-ter Geschaftsberichte.