Tomás Escobar

Digital reporting in Eastern Europe: An empirical study

Abstract In the recent years, the European Union (EU) has developed a series of norms with the objective of increasing the transparency of both companies and the financial markets, as well, through the diffusion of company information via the Internet. The incorporation of countries of Eastern Europe into the EU raises the need to determine the impact of their incorporation on the transparency of the markets. In effect, incorporation into the EU implies the need for companies from those countries to adopt the practices of transparency promoted by the EU. The objective of this article is to determine the distance or differences existing between the information currently supplied by the companies of Eastern Europe that have recently joined the EU or are now in the process of joining and the information required according to the initiatives of the EU. Furthermore, it attempts empirically to identify the variables that could have some influence on the amount of information disclosed. To this end, data from companies of each of the following countries have been collected: Bulgaria, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovakia, Slovenia and Turkey. Results show a statistically significant relationship between the extent of information disclosure on the Internet and a) company size, b) the companys activity being in the financial sector, and c) the fact of employing one of the worlds Big Four accountancy firms for auditing the companys books.

La Difusión Voluntaria de Información Financiera en Internet. Un Análisis Comparativo Entre Estados Unidos, Europa del Este y la Unión Europea

RESUMEN Actualmente, Internet está proporcionando a las empresas un nuevo medio para que puedan distribuir voluntariamente todo tipo de información relativa a sus principales aspectos económicos y financieros. En la literatura académica existente se pone de manifiesto que la información revelada por las empresas a través de este mecanismo va más allá de la que es normativamente exigible. Por otro lado, la publicación de información de carácter obligatorio en Internet puede considerarse una práctica de revelación voluntaria en sí misma. En este trabajo se analiza la información suministrada actualmente por las principales empresas a nivel mundial en Internet. A continuación, se identifican empíricamente las variables que pueden influir sobre el mayor o menor nivel de contenidos de la información corporativa. Para ello, se realiza un estudio de la información que suministran a través de Internet las empresas con mayor valor de capitalización bursátil de los Estados Unidos, Europa del Este y la Unión Europea. Posteriormente, se analizan las posibles relaciones entre la transparencia de las empresas y tres de las variables que con mayor frecuencia se ha empleado en los distintos estudios recogidos en la literatura contable sobre determinantes de la revelación voluntaria: sector, localización geográfica y tamaño. Los resultados permiten concluir acerca de relaciones significativas entre el volumen de información suministrada y estas variables independientes.

Solvency II and XBRL: new rules and technologies in insurance supervision

Purpose - The purpose of this paper is to analyse the way in which the insurance industry is facing the renewal of its regulatory framework with respect to the levels of solvency that insurance entities should maintain. This paper also addresses how technological initiatives in general, and the eXtensible Business Reporting Language (XBRL), in particular, are making a key contribution to the process of adaptation to the new regulation. Design/methodology/approach - The paper analyses the particular advantages that the application of the XBRL standard can offer in this process, and highlight new lines for further research. Findings - After analysing the current situation of the insurance industry, the paper concludes that technological systems, such as XBRL, are necessary to support the consolidation of financial information, and to ensure the digital transparency of the insurer organisations that are engaged in this new regulatory challenge. Practical implications - XBRL is a key resource in the European Common Reporting Project whose objective is the implementation of Basel II in the European Union. The implementation of Solvency II can benefit from this previous experience. Therefore, it suggest a proposal for action. Originality/value - The affiliation of the authors to the insurance sector, the academia and the XBRL community contributes to create a complete view of the possibilities of this breaking project.

Sub-Optimality of Income Statement-Based Methods for Measuring Operational Risk Under Basel II: Empirical Evidence from Spanish Banks

The New Basel Capital Accord (Basel II) was created with the intention of establishing a framework in which financial entities can manage their risks in a more detailed and efficient way. Within this general reform movement, Operational Risk emerges as a fundamental variable. OR can be managed by three alternative methods: the Basic Indicator Approach, Standard Approach and Advanced Measurement Approach. The choice of which method to adopt has become of supreme interest for senior banking managers. This study analyzes the exactitude of the underlying implicit hypotheses that support each method, distinguishing between income statement based methods and the management accounting based method. In the present study the non-optimum character of the two Income Statement-based methods is empirically confirmed, in the light of the data provided by Spanish financial entities.

Testing the inter-relations of factors that may support continued use intention: The case of Facebook

Information systems (IS) may not improve organizational and/or companies’ performance if they are not used by stakeholders. Understanding why people continue or discontinue use of IS is crucial in increasing users’ acceptance. This article aims to analyze what is needed to perpetuate use of Facebook as a social media channel. Factors such as confirmation, perceived usefulness, social influence, satisfaction and attitude were tested for their impact on continued use intention in relation to Facebook. The inter-relations between the aforementioned constructs are tested with empirical data collected from 732 European university students. We found that social influence essentially had no effect within the model, so it seems that intention to continue using Facebook is affected mainly by stakeholders’/users’ attitude toward using this platform. Although we based the research on the IS Continuance Model, this article has extended its dimensions by incorporating (1) social influence and (2) attitude, offering the first investigation of continued use intention in relation to Facebook by testing the inter-relations between the aforementioned factors.

Operational Risk Measurement in Banking Institutions and Investment Firms: New European Evidences

The banking/investment sector must deal with a new variable, Operational Risk, for explaining various recent crises and bankruptcies. Operational Risk, which can be defined briefly as the risk generated by possible failures of a entitys Information Systems (IS), must be measured, covered, mitigated and managed by applying a series of methodologies, each of which assumes that the IS of the bank operates at a certain Stage of Sophistication. The present study proposes a scheme of evolution that details the stages of enhancement in the sophistication of their IS that banking entities may implement, so as to be capable of capturing, mitigating and managing Operational Risk. Using econometric methods, we create a proxy variable to capture the IS Sophistication of each entity. Then, the factor of entity size has been analyzed, and the country effect is explored. Additionally, the importance of intangible assets is weighted, among others entity aspects. The entity size has been revealed as the variable with most influence on the plans formulated in this respect by European entities, against other variables also considered in the present study, such as the country effect or the importance of intangible assets. The work shows how IS decisions referring to Operational Risk management are very influenced by size. It could introduce competition differences in the European banking system.

BaselMapper: an experimental tool for managing operational risk in banks

The Basel Capital Agreement (Basel II) required all banking entities actively to manage Operational Risk by means of making explicit measurements and creating specific items in their general ledgers. Currently, the most sophisticated resource for handling transactional information is the XBRL-GL Taxonomy, an electronic dictionary of business elements or digital tags based on eXtensible Business Reporting Language (XBRL), the digital mark-up language for financial contexts, which in turn has the special feature of incorporating transactional or Global Ledger (GL) information. This study proposes, in one hand, an extension of that dictionary, to incorporate Operational Risk information, and in the other hand, a simple tool to edit and visualise such reports, called BaselMapper, which is tested with a business expert. Since this experimental tool, BaselMapper, was created in 2007 and validated in 2008, till the publication date of this article, several changes have occurred in both its normative and technical foundations. Due to the financial crisis, the Bank of International Settlements has developed a new set of reforms in banking regulation, beyond the Basel II agreement described here, called Basel III. To consult the current regulatory framework, please visit: http://www.bis.org/bcbs/basel3.htm Operational Risk aspects were not modified. Additionally, a new version of the XBRLGL taxonomy is now available, called Global Ledger, at: http://www.xbrl.org/GLFiles/ that still incorporates the COR-BUS module used here. So, essentially, these changes do not modify the aim of this paper, which is to promote the use of XBRL-enabled technology for Operational Risk measurement in banking institutions at the international level. Further research will be necessary to maintain this tool properly updated, with the substantial participation of more potential users.