Some Recent Advances in the Theory of Financial Reporting and Disclosures

Ronald A. Dye

doi:10.2308/acch-51717

Some Recent Advances in the Theory of Financial Reporting and Disclosures

Accounting Horizons ◽

10.2308/acch-51717 ◽

2017 ◽

Vol 31 (3) ◽

pp. 39-54 ◽

Cited By ~ 4

Author(s):

Ronald A. Dye

Keyword(s):

Financial Reporting ◽

Information Economics ◽

Fair Value ◽

Financial Accounting ◽

Theoretical Research ◽

Personal Essay ◽

Voluntary Disclosures ◽

Financial Innovations ◽

Academic Assessments

SYNOPSIS This is a personal essay that contains my views on some of the recent history and evolution of the theory of financial accounting and disclosures. The essay starts by discussing how research on information economics by Hirshleifer and Akerlof combined with Demski's critique of academic assessments of accounting standards shifted theoretical research toward emphasizing the role of voluntary disclosures. Grossman's and Milgrom's “unravelling result” is reviewed, as are recent modeling efforts that provide a foundation for studying firms' incomplete voluntary disclosures. The paper also speaks to some contemporary financial reporting problems, such as fair value accounting, and also to an assessment of some recent financial innovations, such as so-called flash trading.

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Selecting Railway Investments in 1890s America

Accounting Historians Journal ◽

10.2308/aahj-10525 ◽

2017 ◽

Vol 44 (1) ◽

pp. 77-93

Author(s):

Joel E. Thompson

Keyword(s):

Financial Reporting ◽

Accounting Information ◽

Accounting Standards ◽

Financial Accounting ◽

Investment Strategies ◽

Financial Accounting Standards Board ◽

Accounting Data ◽

Rational Decisions

ABSTRACT The purpose of financial reporting is to provide information to investors and creditors to help them make rational decisions (Financial Accounting Standards Board [FASB] 2010). Tracing the development of investors' methods should help with understanding the role of financial accounting. This study examines investment practices involving railways in 1890s America. As such, it furthers our knowledge about the development of investment methods and their necessary information. Moreover, it shows that as investment methods grew in sophistication, there was an enhanced demand for greater comparability in accounting data to make meaningful analyses. Competing investment strategies, largely devoid of accounting information, are also discussed.

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Determinants and Consequences of Firms' Derivative Accounting Decisions

Journal of Financial Reporting ◽

10.2308/jfr-2019-0014 ◽

2020 ◽

Vol 5 (1) ◽

pp. 81-114 ◽

Cited By ~ 1

Author(s):

Spencer Pierce

Keyword(s):

Financial Reporting ◽

Accounting Standards ◽

Fair Value ◽

Financial Accounting ◽

Firm Risk ◽

Accounting Firms ◽

Earnings Volatility ◽

Hedge Accounting ◽

Reported Earnings ◽

Jel Classifications

ABSTRACTFinancial accounting standards require derivatives to be recognized at fair value with changes in value recognized immediately in earnings. However, if specified criteria are met, firms may use an alternative accounting treatment, hedge accounting, which is intended to better represent the underlying economics of firms' derivative use. Using FAS 161 disclosures, I examine determinants of hedge accounting use and the effects of hedge accounting on financial reporting and capital markets. I find variation in firms' hedge accounting use and provide evidence that compliance costs of applying hedge accounting affect firms' decision to use hedge accounting. Firms decrease their reported earnings volatility via derivatives that receive hedge accounting and could further decrease their earnings volatility if hedge accounting were applied to all their derivatives. Inconsistent with arguments given for using hedge accounting, I fail to find a decrease in investors' assessments of firm risk from using hedge accounting.JEL Classifications: M40; M41; G32.

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A Cross-Country Empirical Investigation of Corruption and its Relationship to Economic, Cultural, and Monitoring Institutions: An Examination of the Role of Accounting and Financial Statements Quality

Journal of Accounting Auditing & Finance ◽

10.1177/0148558x0201700403 ◽

2002 ◽

Vol 17 (4) ◽

pp. 325-350 ◽

Cited By ~ 59

Author(s):

Marinilka Barros Kimbro

Keyword(s):

Financial Reporting ◽

Empirical Investigation ◽

Financial Statements ◽

Financial Accounting ◽

Accounting Systems ◽

Financial Reporting Standards ◽

Information Monitoring ◽

Per Capita ◽

Cross Country

This paper empirically tests a model that links economic, cultural, and information/monitoring variables to corruption in 61 countries. The results offer significant evidence to suggest that higher GNP per capita, moderate economic growth, effective legal and financial accounting systems, collectivist values and low power distance are associated with countries that have low corruption. Countries that have better laws, more effective judiciary, good financial reporting standards, and a higher concentration of accountants are found to be less corrupt.

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An Evaluation Of The Implementation Of Fair Value Accounting: Impact On Financial Reporting

Journal of Business & Economics Research (JBER) ◽

10.19030/jber.v9i1.934 ◽

2011 ◽

Vol 9 (1) ◽

Author(s):

Karen T. Cascini ◽

Alan DelFavero

Keyword(s):

Financial Reporting ◽

Accounting Standards ◽

Fair Value ◽

The United States ◽

Financial Accounting ◽

Financial Assets ◽

Financial Accounting Standards Board ◽

Continuous Change ◽

Fair Value Accounting ◽

The Cost

The accounting industry is in a state of continuous change.  In the United States, the historical cost principle has traditionally been the foundation of accounting.  Until recently, assets and liabilities have been required to be recorded at their acquisition prices, with the exception of designated financial assets and financial liabilities.  However, the Financial Accounting Standards Board (FASB) has now created accounting standards that are distant from the cost principle.  Statement of Financial Accounting Standards No. 157: Fair Value Measurements, issued in September 2006 (FAS157, now codified as ASC 820) and Statement of Financial Accounting Standards No. 159: The Fair Value Option for Financial Assets and Financial Liabilities, created in February 2007 (FAS159, now ASC 825-10-25), significantly increases the viability of fair value accounting. The purpose of this paper is to illustrate the benefits and pitfalls of fair value and the corresponding affects on various stakeholders.

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PENGARUH PEMAHAMAN MANAJER TENTANG STANDAR AKUNTANSI KEUANGAN SYARIAH DAN PERAN DEWAN PENGAWAS SYARIAH TERHADAP KUALITAS LAPORAN KEUANGAN BPRS DI ACEH

Jurnal Perspektif Ekonomi Darussalam ◽

10.24815/jped.v1i1.6516 ◽

2017 ◽

Vol 1 (1) ◽

pp. 1-8

Author(s):

Suazhari Suazhari

Keyword(s):

Social Science ◽

Human Resources ◽

Financial Reporting ◽

Supervisory Board ◽

Accounting Standards ◽

Financial Statements ◽

Financial Accounting ◽

Purposive Sampling

This study aimed to determine the effect of managers understanding of sharia financial accounting standards, and the influence of Islamic Sharia Supervisory Board on the quality of the financial statements of BPRS in Aceh. The qualified financial statements has principal characteristics: understandable, relevant, reliable and comparable. The manager understanding of Sharia Financial Accounting Standards and the role of Islamic Sharia Supervisory Board should play a role in achieving quality financial statements. Factor of limited human resources can be a factor that will not achieve the quality of financial reporting. Managers and Sharia Supervisory Board on the BPRS are two of the human resources role in BPRS operations. The sample in this study is the BPRS in Aceh. Survey respondents totaled 35 people who have positions in the BPRS as a director, managers and the Sharia Supervisory Board. Sampling was purposive sampling. The analysis method used is multiple linear regression using the computer software Statistical Package for Social Science (SPSS). The results of this study showed a significant effect between managers understanding of Sharia Financial Accounting Standards on the quality of financial reporting and the existence of a significant effect between the role of the Sharia Supervisory Board on the quality of financial statements.Penelitian ini bertujuan untuk mengetahui pengaruh pemahaman manajer tentang Standar Akuntansi Keuangan Syariah dan pengaruh Dewan Pengawas Syariah terhadap kualitas laporan keuangan BPRS di Aceh. Laporan keuangan berkualitas memiliki karakteristik kualitatif pokok yaitu: dapat dipahami, relevan, handal dan dapat dibandingkan. Pemahaman manajer tentang Standar Akuntansi Keuangan Syariah dan Peran Dewan Pengawas Syariah semestinya berperan dalam mewujudkan laporan keuangan yang berkualitas.Faktor keterbatasan sumber daya manusia dapat menjadi faktor yang menghalangi tidak tercapainya laporan keuangan yang berkualitas.Manajer dan Dewan Pengawas Syariah pada BPRS merupakan dua diantara sumber daya manusia yang berperan dalam operasional BPRS.Sampel pada penelitian ini adalah BPRS yang ada di Aceh.Responden penelitian berjumlah 35 orang yang memiliki jabatan di BPRS sebagai direktur, kepala bagian dan Dewan Pengawas Syariah.Pengambilan sampel secara purposive sampling. Metode analisis yang dipergunakan adalah regresi linear berganda dengan menggunakan software komputer Statistical Package for Social Science (SPSS).Hasil penelitian ini menunjukkan adanya pengaruh yang signifikan antara pemahaman manajer tentang Standar Akuntansi Keuangan Syariah terhadap kualitas laporan keuangan dan juga adanya pengaruh yang signifikan antara peran Dewan Pengawas Syariah terhadap kualitas laporan keuangan.

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Analysis of Zakat Accounting and the Role of the Internal Control System based on Financial Accounting Standards Guidelines (PSAK 109) Zakat Agency in Indonesia

International Journal of Financial Research ◽

10.5430/ijfr.v12n1p192 ◽

2020 ◽

Vol 12 (1) ◽

pp. 192

Author(s):

Hari Setiyawati

Keyword(s):

Control System ◽

Financial Reporting ◽

Internal Control ◽

Accounting Standards ◽

Financial Statements ◽

Financial Accounting ◽

Significant Positive Effect ◽

Internal Control System ◽

Positive Effect

This research was carried out because of the phenomenon of the large potential of zakat in Indonesia and the large number of zakat funds that were corrupted due to unaccountable financial reporting. Many payers of zakat (muzakki) still do not believe in National Zakat Agency (BAZNAS), so zakat payments are often not made through the official of BAZNAS. This research was carried out through a survey which was designed to examine the accountability of financial reporting at the amil zakat and amil zakat institutions in Jakarta and Banten, related to internal control competencies and financial reporting accountability. The expected results of this study are an increase in the accountability of financial reporting by conducting sharia accounting training for staff in amil zakat and amil zakat institutions in Jakarta and Banten. The goal of this study is to contribute scientifically to the science of sharia accounting, specifically accounting for zakat, and to assist accounting departments in preparing financial statements. The results of this study state that compliance with the application of zakat accounting with Financial Accounting Standards Guidelines (PSAK 109) had no significant effect on financial reporting accountability, while the role of the internal control system had a significant positive effect on financial reporting accountability.

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

FINANCIAL REPORTING ◽

10.3280/fr2021-001002 ◽

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.

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An analysis of the financial reporting compliance of South African public agricultural companies

Journal of Economic and Financial Sciences ◽

10.4102/jef.v9i3.73 ◽

2016 ◽

Vol 9 (3) ◽

pp. 833-853 ◽

Cited By ~ 1

Author(s):

Ingrid Baigrie ◽

Danie Coetsee

Keyword(s):

South African ◽

Financial Reporting ◽

Voluntary Disclosure ◽

Fair Value ◽

Agricultural Activities ◽

Voluntary Disclosures ◽

Public Companies ◽

Financial Position ◽

Disclosure Requirements ◽

Research Findings

This article assesses the extent to which South African public companies that are engaged in agricultural activities are complying with the compulsory recognition and measurement and compulsory and voluntary disclosure requirements of IAS 41 Agriculture. Sixteen large South African public companies with material holdings of biological assets in their statements of financial position were selected for analysis. The results of the analysis show that the majority of South African agricultural companies are using fair value to measure their biological assets at initial recognition as well as at the end of each reporting period. Most of these companies are complying with the compulsory disclosure requirements of IAS 41, and are also providing certain of the recommended voluntary disclosures listed in IAS 41. The study concludes that the measurement methods used by companies to value their biological assets and the nature and extent of both compulsory and voluntary disclosures of these assets are sector-specific. This is consistent with previous research findings. This study contributes to the existing literature by providing a baseline on the financial reporting of agricultural entities in South Africa prior to the implementation of IFRS 13.

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Complementarity between Audited Financial Reporting and Voluntary Disclosure: The Case of Former Andersen Clients

The Accounting Review ◽

10.2308/tar-2017-0550 ◽

2021 ◽

Author(s):

Richard Frankel ◽

Alon Kalay ◽

Gil Sadka ◽

Yuan Zou

Keyword(s):

Financial Reporting ◽

Voluntary Disclosure ◽

Reporting Quality ◽

Financial Reporting Quality ◽

Voluntary Disclosures ◽

Cross Sectional ◽

Prior Literature ◽

Arthur Andersen

Prior literature presents various perspectives on the role of financial reporting. One view is that mandatory periodic reporting disciplines managers and encourages timely voluntary disclosure. We examine this "confirmation hypothesis" using the shock to financial-reporting quality experienced by Arthur Andersen clients forced to switch auditors. Consistent with the confirmation hypothesis, we find that former Andersen clients increase disclosure after they change auditors. They increase forecasting frequency and enhance forecasting precision and specificity. We present additional cross-sectional evidence that shows Arthur Andersen clients with larger increases in financial-reporting quality increased their disclosure by relatively more, even within the sample of Arthur Andersen clients. We supplement our main findings with a battery of tests to reduce the possibility that alternative shocks and uncertainty drive our results. Our findings support complementarity between financial-reporting quality and voluntary disclosures.

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Fair Value Accounting: Affect On The Auditing Profession

Journal of Applied Business Research (JABR) ◽

10.19030/jabr.v26i3.292 ◽

2010 ◽

Vol 26 (3) ◽

Cited By ~ 7

Author(s):

Danny Pannese ◽

Alan DelFavero

Keyword(s):

Multinational Corporations ◽

Financial Reporting ◽

Accounting Standards ◽

Fair Value ◽

Financial Accounting ◽

Credit Crisis ◽

Fair Value Accounting ◽

Financial Reporting Standards ◽

Business Entities ◽

Recent Financial Crisis

During this period of global markets, multinational corporations are demanding financial accounting standards with enhanced uniformity. In an effort to achieve this objective, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have been working together on the Convergence Project, aiming to develop accounting standards that closely correlate with international financial reporting standards.  In September 2006 and February 2007, the FASB issued two key fair value accounting (FVA) standards which focused on providing guidelines for fair value measurement (through a classification hierarchy), expanding disclosure requirements, and also allowing business entities to increase FVA’s application.  However, the recent financial crisis has placed increased scrutiny on estimates derived under FVA.  Consequently, a spotlight has been placed on the auditing profession, as the effectiveness of an auditor’s ability to test estimates derived under FVA has been questioned due to numerous firms approaching collapse in the midst of the credit crisis.  Thus, the purpose of this paper is to present the challenges auditors face when auditing FV estimates, and to discuss the profession’s capability of adapting to FVA in the future.

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