Resume
Accounting & Governance; short summary of lectures and papers
- Cours
- Établissement
Very short summary of all lectures, including mandatory papers and the guestlectures. Easy to learn.
[Montrer plus]
Vendeur
S'abonner
IRadboud
Avis reçus
Aperçu du contenu
Short summary Accounting and GovernanceLecture 1, Introduction
- Accounting = the system of summarizing business and financial transactions and analyzing
and reporting the results
- Governance = the system by which entities are directed and controlled
Lecture 2, Decision usefulness of financial accounting information
- Decision useful =
o The ability of financial accounting information to help users make good decisions
o If information contributes to a better predicting future economic state
- Why do we need a decision useful concept?
o Sets boundary for reporting companies to guide what to include in financial report
o Knowing investor’s decision needs enables a firm to prepare useful financial
statements -> using rational decision-making theory
Rational decision-making theory captures the decision process of the
average investor (decisions are (on avg) rational & decision maximize utility)
Makes clear how financial info helps investor to make decisions
Helps accountant to provide useful info for investment decision
- Efficient securities market = market where the prices of securities traded on that market
always fully reflect all information that is publicly known about those securities.
- Capital asset pricing model = E(Rjt) = Rf + βj (E(Rmt) – Rf)
o Critique -> assumes rational expectations – common knowledge – no transact costs
- IASB conceptual framework = describes the objectives of financial reporting -> a tool that
helps the board develop requirements in IFRS standards based on clear principles
o Principles should require entities to present relevant/comparable/transparent info
o Firms need to report according to IFRS -> to compete and be comparable
Link between decision usefulness & rational decision-making theory -> we need assumptions on how
investors make decisions.
- Fundamental qualitative characteristics: info is useful if it is relevant and reliable
o Relevant = if the information makes a difference in decision making
o Faithfully representable = reliability = information is true / without material errors
- Enhancing qualitative characteristics: enhance the usefulness of useful info
o Comparability – verifiability – timeliness – understandability
Papers Gassen & SChwedler – Williams & Ravenscroft
Accounting research has not come up with a measure of decision usefulness -> “Decision usefulness is an admittedly
nonspecific term as virtually anything could be useful to someone’s decision’’. Rests on rational economic actors -> limited
rationality. Accounting data is not predictive, use accountability / stewardship.
- Fair value mark-to-market accounting: most decision useful for liquid assets -> a method of measuring the fair
value of accounts that can fluctuate over time, such as assets and liabilities
- Historical cost accounting: most decision useful for non-liquid assets -> a method in which the value of an asset on
the balance sheet is recorded at its original cost when acquired by the company.
, Lecture 3, Voluntary disclosure & decision usefulness of non-financial
information
- Sustainability reporting = provides non-financial information, focus on environmental and
social related aspects -> ESG factors -> financially material to investment performance
o Mandatory reporting = reporting is obligatory for all entities under consideration
o Voluntary reporting = firms are free to choose what and how to report
Why do companies engage in non-financial reporting?
- Signaling theory = firms with superior non-financial performance voluntarily disclose info to
make a difference from the poor performance firms
o To reveal the nature of their true performance & to potentially increase market value
- Legitimacy theory = firms with poor non-financial performance voluntarily disclose info as a
legitimation tactic to influence public perception.
o To re install or improve the legitimacy of their firm
What sustainability information do firms need to report?
- IFRS = set of accounting standards that govern how transactions and events should be
reported in the financial statements
- CSRD = introduces more detailed reporting requirements on sustainability
o
- Materiality = information is material if omitting or misstating it could be expected to
influence decisions that users of financial reports make
o Material information is expected to influence decisions -> decision useful info
Impact materiality = material topics are those that reflect the organizations
most significant impacts on economy, environment and people.
Stakeholder oriented (GRI)
Single materiality = how sustainable factors affect the financial value of firm
Investor oriented (SASB)
Double materiality = how sustainable factors affect the financial value of a
firm and how the firm affects the environment and society.
Stakeholder oriented (CSRD)
Papers Dhaliwal - Amel-Zadeh
Can the initiation of voluntary disclosure reduce a firm´s cost of equity capital?
- High cost of equity capital = more likely to report sustainability information -> attractive for investors -> cost of
equity capital will decrease because high reliability and thus lower risk
- Superior CSR performance -> cost of equity capital decreases because of high info reliability and thus a lower risk
- Superior CSR performance attracts investors = raise a large amount of capital
Why and how do investors use ESG information?
- ESG = environmental, social, and governance information -> considered as material info for investment decisions
- Use of ESG information is driven primarily by financial rather than ethical motives
- Barriers to use ESG data in the investment decision process: lack of cross-company comparability
and lack of standards governing the reporting ESG data.
- Some investment styles: active ownership, full integration, positive screening
o Overall, investors consider all strategies, except negative screening methods, to have a positive impact
on returns
Active ownership = when shareholders engage in a firm, they have invested in to influence the
company's strategy and actions.
positive screening = process of finding firms that score good on ESG factors relative to peers
Les avantages d'acheter des résumés chez Stuvia:
Qualité garantie par les avis des clients
Les clients de Stuvia ont évalués plus de 700 000 résumés. C'est comme ça que vous savez que vous achetez les meilleurs documents.
L’achat facile et rapide
Vous pouvez payer rapidement avec iDeal, carte de crédit ou Stuvia-crédit pour les résumés. Il n'y a pas d'adhésion nécessaire.
Focus sur l’essentiel
Vos camarades écrivent eux-mêmes les notes d’étude, c’est pourquoi les documents sont toujours fiables et à jour. Cela garantit que vous arrivez rapidement au coeur du matériel.
Foire aux questions
Qu'est-ce que j'obtiens en achetant ce document ?
Vous obtenez un PDF, disponible immédiatement après votre achat. Le document acheté est accessible à tout moment, n'importe où et indéfiniment via votre profil.
Garantie de remboursement : comment ça marche ?
Notre garantie de satisfaction garantit que vous trouverez toujours un document d'étude qui vous convient. Vous remplissez un formulaire et notre équipe du service client s'occupe du reste.
Auprès de qui est-ce que j'achète ce résumé ?
Stuvia est une place de marché. Alors, vous n'achetez donc pas ce document chez nous, mais auprès du vendeur IRadboud. Stuvia facilite les paiements au vendeur.
Est-ce que j'aurai un abonnement?
Non, vous n'achetez ce résumé que pour €4,99. Vous n'êtes lié à rien après votre achat.
Peut-on faire confiance à Stuvia ?
4.6 étoiles sur Google & Trustpilot (+1000 avis)
78998 résumés ont été vendus ces 30 derniers jours
Fondée en 2010, la référence pour acheter des résumés depuis déjà 14 ans