Financial Reporting Choices of Large Private Firms

2017 ◽  
Author(s):  
Jennifer J. Gaver ◽  
Paul Mason ◽  
Steven Utke
Keyword(s):  
Financial Reporting ◽  
Private Firms

Discretionary Accruals in Italian Private Firms and Non-Linear Bank Loan Granting

2017 ◽  
pp. 83-99
Author(s):  
Elisabetta Mafrolla ◽  
Viola Nobili
Keyword(s):  
Financial Reporting ◽  
Banking System ◽  
Regulatory System ◽  
Discretionary Accruals ◽  
Bank Loans ◽  
Bank Loan ◽  
Banking Union ◽  
Private Firms ◽  
European Banking Union

This paper investigates whether and at what extent private firms reduce the quality of their accruals in order to signal a better portrait to the bank and obtain new or larger bank loans. We measure earnings discretionary accruals of a sample of Italian private firms, testing whether new and larger bank loans are associated with a higher (lower) quality of earnings in borrowers' financial reporting. We study bank loan levels and changes and how they impact discretionary accruals and found that, surprisingly, private firms' discretionary accruals are systematically positively affected by an increase in bank loans, although they are negatively affected by the credit worthiness rating assigned to the borrowers. We find that the monitoring role of the banking system with regard to the adoption of discretionary accruals is effective only when the loan is very large. This paper may have implications for policy-makers as it contributes to the understanding of the shortcomings of the banking regulatory system. This is an extremely relevant issue since the excessive amount of non-performing loans held by Italian banks recently threatened the stability of the European Banking Union as a whole.

A literature survey of financial reporting in private firms

2018 ◽  
Vol 30 (1) ◽  
pp. 31-37 ◽  
Author(s):  
A. Habib ◽  
D. Ranasinghe ◽  
H.J. Huang
Keyword(s):  
Financial Reporting ◽  
Literature Survey ◽  
Private Firms

Is risk reporting a possible link between financial and management accounting in private firms?

2021 ◽  
pp. 29-60
Author(s):  
Chiara Crovini ◽  
Giovanni Ossola
Keyword(s):  
Institutional Theory ◽  
Financial Reporting ◽  
Management Accounting ◽  
Risk Attitude ◽  
Financial Accounting ◽  
Private Firms ◽  
Risk Disclosure ◽  
Direct Outcome ◽  
Risk Reporting

This study represents a theoretical analysis with the purpose to continue the discussion on the relationship between management accounting (MA) and financial accounting (FA), by concentrating on the role of risk reporting as a possible manifestation of their convergence. Moreover, the analysis focuses on the private-firm sector as private firms represent the backbone of the economic system of several countries and little is known about financial and non-financial reporting. Drawing on the neo- Durkheimian institutional theory, this paper develops a conceptual framing that considers risk as an embedded element of the business domain and risk reporting as a direct outcome of the convergence between MA and FA in private firms. Furthermore, the neo-Durkheimian institutional theory emphasizes that the owners and managers' risk attitude is a crucial element affecting risk disclosure, especially in private firms.

Financial Reporting Quality and Investment Efficiency of Private Firms in Emerging Markets

2011 ◽  
Vol 86 (4) ◽  
pp. 1255-1288 ◽  
Author(s):  
Feng Chen ◽  
Ole-Kristian Hope ◽  
Qingyuan Li ◽  
Xin Wang
Keyword(s):  
Emerging Markets ◽  
Financial Reporting ◽  
Public Information ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Private Firms ◽  
Investment Efficiency ◽  
Market Demand ◽  
Firm Level

ABSTRACT Prior research shows that financial reporting quality (FRQ) is positively related to investment efficiency for large U.S. publicly traded companies. We examine the role of FRQ in private firms from emerging markets, a setting in which extant research suggests that FRQ would be less conducive to the mitigation of investment inefficiencies. Earlier studies show that private firms have lower FRQ, presumably because of lower market demand for public information. Prior research also shows that FRQ is lower in countries with low investor protection, bank-oriented financial systems, and stronger conformity between tax and financial reporting rules. Using firm-level data from the World Bank, our empirical evidence suggests that FRQ positively affects investment efficiency. We further find that the relation between FRQ and investment efficiency is increasing in bank financing and decreasing in incentives to minimize earnings for tax purposes. Such a connection between tax-minimization incentives and the informational role of earnings has often been asserted in the literature. We provide explicit evidence in this regard.

scholarly journals The Investment Efficiency Of Private And Public Firms: Evidence From Korea

2015 ◽  
Vol 31 (4) ◽  
pp. 1387 ◽  
Author(s):  
Keehwan Kim ◽  
Ohjin Kwon
Keyword(s):  
Information Asymmetry ◽  
Financial Reporting ◽  
Agency Problem ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Private Firms ◽  
Investment Efficiency ◽  
Public Firms ◽  
Private And Public ◽  
The Difference

<p class="s0">This study examines the investment efficiency of private and public firms in Korea. Prior studies suggest that the investment efficiency of firms can change according to the companies' agency problem caused by the existence of information asymmetry. Moreover, they argue that there is less information asymmetry in private firms than in public firms, because the major investors of private firms have access to the internal information of the companies. We extend these studies by comparing the investment efficiency of private and public firms using an extended audited financial dataset of Korean firms. Our results show that the investment efficiency of private firms is higher than that of public firms, because the agency problem of the former is lower than that of the latter. Additionally, private firms invest more efficiently in R&amp;D and capital expenditures than public firms. Further, when we use alternative exogenous firm-specific proxies to measure the likelihood of over or under-investment, the results are substantially consistent with the main results. Finally, we re-test our hypotheses by including financial reporting quality proxies as control variables in the main regression model. These investigations further support our main results. Our study contributes to emerging literature on the difference between private and public firms by showing that the investment efficiency of the former is different from that of the latter. In addition, this study provides additional evidence on the agency problem that affects firms' investment decisions.</p>

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