Vera Palea

Fair Value Accounting and Its Usefulness to Financial Statement Users

This paper aims to discuss fair value accounting and its usefulness to financial statement users. The European Commission has recently endorsed IFRS 13 on fair value measurement and is considering the endorsement of IFRS 9, which extends the use of fair value for financial instruments. Furthermore, fair value accounting has been under deep scrutiny because of its alleged role in the financial crisis. Therefore, the usefulness of fair value accounting is a key issue for standard setting purposes. This paper delineates the theoretical background for fair value accounting, it provides empirical evidence on its usefulness, it highlights some controversial issues and makes some proposals for standard setting discussion.

Financial reporting for sustainable development: Critical insights into IFRS implementation in the European Union

Abstract By adopting a political economy perspective to accounting, this paper provides an overall post-implementation assessment of International Financial Reporting Standards (IFRS) adoption relative to the European Union’s (EU’s) fundamental goal of sustainable development. The paper questions the consistency of the International Accounting Standards Board’s business view with the EU’s and provides some critical insights into the potential long-run effects of IFRS on the European economy and society. Therefore, it raises several doubts about unquestioned accounting standardization at a global level and makes some suggestions for future policymaking and research.

The Effects of the European Regulation 1606/2002 on Market Efficiency: Early Empirical Evidence and Some Suggestions for Future Research and Policy-Making Discussion

The European Regulation 1606/2002 has required European firms listed on the European stock markets to prepare, starting from 2005, their consolidated financial statements according to the international accounting standards IAS/IFRS. The purpose of such a regulation is to ensure a high degree of transparency and comparability of financial statements and, hence, an efficient functioning of the European capital market. This paper investigates whether such a purpose can be considered as reached by focusing on the firms’ cost of capital. It shows that early evidence documents beneficial effects from the IAS/IFRS adoption, even though such effects vary due to differences still persisting in the European countries’ institutional frameworks and firms’ incentives. The paper also makes some suggestions for future research and policy-making discussion

Fair Value Measurement for Private Equities: A Plus or a Minus for Stakeholders?

In this paper, we discuss the potential economic consequences of IFRS 13 endorsement in the European Union. Our focus is on private equity valuation. We review prior research and perform a field-test in order to shed light on the possible effects of its adoption. Our paper questions whether fair value, as defined by IFRS 13, is an appropriate measure for private equities and can effectively contribute to enhance transparency and comparability in financial statement, which is one of the explicit purposes of both the IASB and the European Union Regulation 1606/2002. Our field-test supports this claim and shows that market-based valuation techniques fail to provide fair values which are a faithful representation of the economic real world phenomena they purport to represent. Consistently with previous research, we show that market and transaction multiples do a poor job and relevant entity-specific adjustments will be necessary.

Explaining and Testing the Economic Organization of Capabilities in the Light of the Contractual Theories of the Firm

Contractual and capabilities perspectives to the firm have often been considered as competing and rival theories in explaining why a firm exists and which its boundaries are.Purpose of this paper is that of trying to identify possible points of contact between these theories and, especially, to explain in-house accumulation of capabilities by using the paradigms of contractual theories.