nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2021‒11‒01
five papers chosen by

  1. The implementation of the IFRS 9 accounting standard in Italy by small banks and financial intermediaries: initial evidence By Andrea Canton; Tommaso Loizzo; Federico Schimperna
  2. Jordan: Technical Assistance Report-Fiscal Transparency Evaluation By International Monetary Fund
  3. The impact of the adoption of IFRS standards on the informational relevance of financial performance indicators of companies listed in the Casablanca BVC By Adil Laouane; Mohamed Torra
  4. White Knights or Machiavellians? Understanding the motivation for reverse takeovers in Singapore and Thailand By Pantisa Pavabutr
  5. How deep are the deep parameters? By Andrea Passalacqua; Paolo Angelini; Francesca Lotti; Giovanni Soggia

  1. By: Andrea Canton (Bank of Italy); Tommaso Loizzo (Bank of Italy); Federico Schimperna (Bank of Italy)
    Abstract: The IFRS 9 accounting standard, which entered into force in 2018, introduced far-reaching innovations, has been applied in different ways by banking and other financial institutions. Thus, sometimes relatively simple solutions have been adopted, in line with unsophisticated business operations, while in other cases, more complex choices were required. Additionally, the outbreak of the COVID-19 pandemic posed challenges for the application of the standard. In this scenario, in the second half of 2020, the Bank of Italy launched a survey on a sample of directly supervised entities, aiming to analyse the implementation of the new standard and the possible impact of the pandemic on accounting choices. This work provides a summary of the results with a dual purpose. First, it aims to provide evidence of the level of implementation of the standard by less significant banks and secondly, it highlights methodological choices or practices that may not fully comply with the standard, with potential implications for the ratios relevant for prudential supervision purposes.
    Keywords: IFRS 9, Covid-19, banks, intermediaries, accounting, supervision
    JEL: G21 G23 M41
    Date: 2021–10
  2. By: International Monetary Fund
    Abstract: Jordan has taken important steps to enhance its fiscal transparency over the past decade. Notably, there is a comprehensive legal framework for the management of public finances. Fiscal reports have become more comprehensive and cover a high proportion of public sector institutions. The frequency of in-year reporting is at an advanced level, as is the timeliness of publication of the government’s annual financial statements. Fiscal statistics are disseminated in accordance with international standards (SDDS). Fiscal forecasts and budgets have become more forward looking and policy oriented with the introduction of a five-year medium-term budget framework and a program classification. As a result of improvements in fiscal transparency practices, in the 2019 Open Budget Survey, Jordan scored above the global average for transparency, and is the only country in the region ranked overall as ‘green’ on this measure. Nevertheless, the FTE provides a more detailed and in-depth analysis with a broader focus.
    Date: 2021–10–08
  3. By: Adil Laouane (UIT - Université Ibn Tofaïl); Mohamed Torra (UIT - Université Ibn Tofaïl)
    Abstract: The adoption of international financial standards should provide companies with enormous benefits, especially through the production of reliable and high-quality financial information by strengthening the explanatory power of accounting and stock market performance indicators. These indicators are key elements used to assess the value created by firms. This article is proving to be a great contribution to scientific research in this field. It will allow an empirical approach to assess the impact of the adoption of IFRS standards on the informational relevance of financial performance indicators. In figures, 93 observations were collected from companies listed on the Casablanca stock exchange from 2015 through 2020. We used a theoretical framework based essentially on the theory of financial market efficiency and a series of empirical tests on the two samples: IFRS- Sample Standards and Local- Sample Standards. Ultimately, our main results seem to indicate that the implementation of IFRS standards contributes to slightly to the improvement of the informational relevance of accounting figures for Moroccan companies listed in the Casablanca stock market.
    Abstract: L'adoption des normes financières internationales devrait procurer aux entreprises des avantages énormes surtout à travers la production d'une information financière fiable et de haute qualité en renforçant le pouvoir explicatif des indicateurs comptables et boursiers de performance, principaux éléments utilisés pour apprécier la valeur créée par les firmes. Cet article s'avère être d'un grand apport à la recherche scientifique dans ce domaine. Elle permettra d'évaluer à travers une approche empirique l'impact de l'adoption des normes IFRS sur la pertinence informationnelle des indicateurs de performance financière. En nombre, il s'agit de 93 observations collectées auprès des entreprises cotées à la bourse de valeur de Casablanca pour la période allant de 2015 à 2020. Nous avons eu recours à un cadre théorique basé essentiellement sur la théorie d'efficience des marchés financiers et sur une série de tests empiriques sur les deux échantillons : Echantillon-Normes IFRS et Echantillon-Normes locales. En définitive, nous pouvons avancer que dans l'ensemble, nos principaux résultats semblent indiquer que la mise en place des normes IFRS à contribuer légèrement à l'amélioration de la pertinence informationnelle des chiffres comptables pour les entreprises marocaines cotées à la place casablancaise.
    Keywords: IFRS,Local Standards,Informational Relevance,Financial Performance JEL classification : M41 Paper Type : Empirical research,Normes IFRS,Normes locales,Pertinence informationnelle,Performance financière
    Date: 2021–10
  4. By: Pantisa Pavabutr
    Abstract: This paper analyzes 47 reverse takeovers (RTOs), in which privately held firms acquire public firms to obtain listing status in Singapore and Thailand between 2007–2015. Unlike U.S. RTOs in prior studies, these transactions cannot be regarded as short-cuts to bypass listing rules since merged firms must meet the same minimum listing requirement as firms listing with IPOs. Rather, private firms treat RTOs as an opportunity to become public firms without immediate dilution by acquiring smaller firms at bargain prices. By examining shareholder circulars and analysis of transaction characteristics, we find that co-parties tend to cite growth from business diversification as their motivation for RTOs. Distressed public firms more frequently emphasize the motivation to reorganize and revive by merging with stronger private firms. Analysis of return and financial accounting performance shows that the merged firms experience improved growth and generate positive wealth impact; thus, offering opportunity for incumbent shareholders of public firms to recover some of their investment value.
    Keywords: Reverse Takeovers; Back-door Listings; Emerging Markets; Bootstrappin
    JEL: G14 G34
    Date: 2021–06
  5. By: Andrea Passalacqua (Board of Governors of the Federal Reserve System); Paolo Angelini (Bank of Italy); Francesca Lotti (Bank of Italy); Giovanni Soggia (Bank of Italy)
    Abstract: We show that bank supervision reduces distortions in credit markets and generates positive spillovers for the real economy. Exploiting the quasi-random selection of inspected banks in Italy, we show that financial intermediaries are more likely to reclassify loans as non-performing after an audit. Moreover, they change their lending policies as the composition of new lending shifts toward more productive firms. As a result, productive firms invest more in labor and capital, while underperforming firms are more likely to exit the market. Taken together, our results show that bank supervision is an important complement to regulation in improving credit allocation.
    Keywords: bank supervision, inspections, credit allocation, real effects.
    JEL: G22 G28
    Date: 2021–10

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NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.