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Article
Publication date: 1 April 2009

H.A. van Wyk and J. Rossouw

According to generally accepted accounting practice, the objective of financial statements is to provide useful information to the primary user groups of such statements…

1651

Abstract

According to generally accepted accounting practice, the objective of financial statements is to provide useful information to the primary user groups of such statements, regardless of the size of the entity. The primary users of the financial statements of SMEs are the owners, South African Revenue Services (SARS) and bankers. The recognition, measurement and disclosure requirements of full IFRSs do not result in cost‐effective and useful information being provided to the users of the financial statements of SMEs (non‐listed companies, close corporations and other small entities, irrespective of their legal form), because these users do not need the extensive and complex information provided in general purpose financial statements. Consequently, an accounting standard is required to differentiate between general and limited purpose financial statements. The International Accounting Standards Board (IASB) issued an exposure draft (ED 222) on IFRS for SMEs in February 2007. These stipulated modifications relating mainly to relaxed disclosure requirements and are more applicable to medium‐sized entities. According to a survey among preparers of financial statements in June 2007, these developments may not be adequate for the purposes of smaller entities, irrespective of their legal form. Accordingly, the study recommends that a formal, separate set of simplified differential reporting standards be developed for smaller entities.

Open Access
Article
Publication date: 5 December 2022

Karen Handley and Courtney Molloy

This paper takes a structured literature review (SLR) approach to identify gaps in the literature and suggest future research opportunities. It focuses on corporate governance…

2086

Abstract

Purpose

This paper takes a structured literature review (SLR) approach to identify gaps in the literature and suggest future research opportunities. It focuses on corporate governance (CG) performed outside the formal board of directors’ structure and examines research of alternative CG of small and medium-sized entities (SMEs).

Design/methodology/approach

The authors use the SLR method to search the Scopus database, extracting and synthesising findings relating specifically to SMEs’ CG. These are tabulated and described using bibliometric software.

Findings

The authors highlight an absence of tailored theoretical approaches to understanding CG in SMEs, which differs from the governance of larger entities. They also find evidence of alternative governance structures in SME CG.

Research limitations/implications

Further research should embrace management and other theoretical perspectives and expanded methodologies, nuances in understanding offered in contextualised settings and awareness of practical implications to better understand the specific setting of CG in SMEs.

Practical implications

SMEs seek to access the scarce resources and skills external to their formal CG structures. Regulators and resource providers should mobilise facilitation and training for this expansion.

Originality/value

The authors synthesise a large body of literature to extract findings specific to SMEs. A unique contribution is our focus on alternative forms of CG in SMEs. Evidence of alternative boards points to resolutions for human capital shortages in SMEs.

Details

Meditari Accountancy Research, vol. 30 no. 7
Type: Research Article
ISSN: 2049-372X

Keywords

Book part
Publication date: 1 January 2008

Ronita D. Singh and Susan Newberry

Purpose – Corporate governance requirements imposed internationally as part of the New International Financial Architecture (NIFA) include compliance with International Financial…

Abstract

Purpose – Corporate governance requirements imposed internationally as part of the New International Financial Architecture (NIFA) include compliance with International Financial Reporting Standards (IFRS). The appropriateness of applying IFRS in developing countries has long been controversial. Recently, the International Accounting Standards Board (IASB) extended its project on IFRS for Small and Medium Entities (SMEs) to include developing countries. This paper provides a history of the controversy over IFRS in developing countries and examines the SMEs project as it affects developing countries.

Design/methodology/approach – This paper uses an agenda-setting theoretical framework and document analysis to analyse IASB's published documents as part of its formal due process.

Findings – The controversies surrounding the application of IFRS in developing countries seem likely to continue. The public submission process may be ineffective and too late for those seeking to influence IFRS developments. The findings suggest that those seeking IFRS for developing countries may need to both devise an acceptable solution and obtain inside access to the standard-setting process to achieve this aim.

Research limitations – The research is limited to literature review and documentary analysis and therefore subject to the known limitations of published project documentation in accounting standard-setting.

Originality/value – Contributes to understanding of international accounting standard-setting, including why developing country issues seem likely to continue.

Details

Corporate Governance in Less Developed and Emerging Economies
Type: Book
ISBN: 978-1-84855-252-4

Article
Publication date: 6 September 2019

Łukasz Matuszak and Ewa Różańska

Based on a set of complementary theories, namely, the legitimacy, stakeholder and signaling theories, the purpose of this paper is to investigate the visibility of corporate…

Abstract

Purpose

Based on a set of complementary theories, namely, the legitimacy, stakeholder and signaling theories, the purpose of this paper is to investigate the visibility of corporate social responsibility (CSR) disclosures on bank websites. In particular, we explored the accessibility, placement, reporting format, extent and content of online CSR information. This paper also examined the effect of size, being listed, ownership structure and the internationalization of banks on online CSR reporting.

Design/methodology/approach

A sample consisting of 20 banks was used where the data were manually collected from the websites of various banks during the fourth quarter of 2017. Three reporting formats were explored: information posted directly on the website, information contained in a separate CSR report and information within a management commentary or annual report or integrated report. Content analysis was used to measure the level of online CSR disclosures in four sub-dimensions: environment, human resources, products and customers and community involvement. The sample was grouped according to the criteria of size, being listed, ownership structure and internationality. Non-parametric statistics were used to analyze some factors that influence CSR disclosure, namely, size, public ownership, internationalization and foreign ownership.

Findings

The results indicate that accessibility to CSR information is relatively good. The placement of CSR information on websites varies among banks. Moreover, community involvement was the most disclosed dimension on the banks’ websites. There was a lack of disclosure on items regarding the environment. Furthermore, the findings of this paper showed that significant determinants for explaining online CSR disclosure level were size and being listed.

Originality/value

This study contributes to the literature by examining the online CSR disclosure practices of banks from an emerging market with a different socio-economic context and regulations compared to the developed market.

Details

Social Responsibility Journal, vol. 16 no. 8
Type: Research Article
ISSN: 1747-1117

Keywords

Article
Publication date: 7 October 2019

Donata Sobakinova, Yan Zhou and Dilawar Khan Durrani

Despite the existence of a vast body of research on entrepreneurship, little is known about why some entrepreneurs are able to generate and realize more business ideas than…

Abstract

Purpose

Despite the existence of a vast body of research on entrepreneurship, little is known about why some entrepreneurs are able to generate and realize more business ideas than others. This study aims to present a prospective answer to this question by empirically examining the relationships among human capital outcomes (entrepreneurial knowledge and skills) and the number of business ideas generated and implemented. Additionally, the authors examined the moderating effect of the entrepreneurial self-efficacy on the proposed relationships.

Design/methodology/approach

A statistical analysis on a sample of 340 Russian entrepreneurs was conducted.

Findings

The results from the analysis indicated that human capital outcomes (entrepreneurial knowledge and skills) are positively related to the number of generated and implemented ideas. Furthermore, it was seen that entrepreneurial self-efficacy significantly moderates the relationship between human capital outcomes and the number of implemented ideas. However, self-efficacy has no significant moderating effect on the relationships among human capital outcomes and the number of generated ideas. Finally, the results showed that the number of ideas generated mediates the relationships among human capital outcomes and the number of ideas implemented.

Originality/value

To the best of the authors’ knowledge, no previous study has investigated the combination of such variables as entrepreneurial human capital outcomes, entrepreneurial self-efficacy and the number of new business ideas. This paper investigates this gap in the literature with an empirical analysis of the relations between the mentioned variables based on data collected from Russian entrepreneurs.

Details

VINE Journal of Information and Knowledge Management Systems, vol. 50 no. 1
Type: Research Article
ISSN: 2059-5891

Keywords

Article
Publication date: 6 March 2019

Łukasz Matuszak, Ewa Różańska and Małgorzata Macuda

The purpose of this paper is to investigate the extent and trend of corporate social responsibility (CSR) reporting in commercial banks in Poland and examine the link between…

2012

Abstract

Purpose

The purpose of this paper is to investigate the extent and trend of corporate social responsibility (CSR) reporting in commercial banks in Poland and examine the link between corporate governance characteristics, namely size of the bank, ownership, boards size, board diversity and CSR disclosures in the banks.

Design/methodology/approach

The annual reports and CSR reports of the banks were examined between 2008 and 2015 using content analysis and panel data analysis.

Findings

The results indicate that banks improved their CSR reporting practices during examined period. There are statistically significant differences in the level of CSR disclosures between banks with a different ownership structure. Both foreign majority shareholder group as well as state majority shareholder group have a positive influence on CSR as compared with Polish majority shareholder (PMS) group (excluding State). Moreover, being listed on stock exchange has a positive influence on CSR as compared with not being listed. Further, the results also revealed that there is a significant positive effect of almost all variables related to the management board, namely, size, female board leadership and foreign board members on CSR disclosure, whereas all supervisory board variables and all considered ownership variables have no statistically significant impact on CSR disclosure.

Originality/value

This research contributes to the existing literature because the banking sector is often excluded from CSR studies due to its specific legal regulations and seemingly little environmental impact. Moreover, there are only few studies analysing the effect of boards characteristics on the banks CSR disclosure, especially in emerging countries. This study is also the first of this kind focusing on the two-tier system. Furthermore, the study provides the instrument to measure CSR in the banking industry. Finally, the research stresses the crucial implications for banking sector, shareholders and regulatory bodies.

Details

Journal of Accounting in Emerging Economies, vol. 9 no. 1
Type: Research Article
ISSN: 2042-1168

Keywords

Article
Publication date: 29 October 2019

Senthilkumar Venkatachalam, Alasdair Marshall, Udechukwu Ojiako and Chamabondo Sophia Chanshi

The purpose of this paper is to explore, using fine-grained exploratory multi-case studies, organisational learning practices – and associated constraints – impacting the…

Abstract

Purpose

The purpose of this paper is to explore, using fine-grained exploratory multi-case studies, organisational learning practices – and associated constraints – impacting the performance of four small- and medium-sized project organisations which deliver energy efficiency projects in South Africa and whose learning practice mixes are of wider significance for the emerging project society in the region.

Design/methodology/approach

The unit of analysis is the Energy Efficiency Demand Side Management (EEDSM) programme; a US$104m grant funded the initiative directed at supporting energy efficient retro-fit projects across local municipalities in South Africa. Thematic analysis is undertaken, based on multiple exploratory interviews with project practitioners working for small- and medium-sized EEDSM project organisations.

Findings

Recognising the criticality of tacit knowledge as a focus for learning, within unstructured, novel, non-routine and technically specialised learning contexts in particular, the widespread lack of organisational harnessing through linkages to strategy and performance are noted, and advocacy is offered for the development of appropriate learning cultures linked to communities of practice that bring specialists together from across regional project societies.

Research limitations/implications

The socio-political context of the EEDSM programme, although briefly addressed for its organisational cultural implications, was not given detailed consideration in the exploratory interviews. This would have enhanced the idiographic complexity of the findings, while also reducing prospects for distilling generalisable organisational learning improvement opportunities for emerging project societies. However, the study does not seek to provide evidence for specific learning practice effects on performance as this was not something the interviewees felt able to comment on in significant detail.

Originality/value

Learning practice studies for small- and medium-sized project organisations remains sparse, so are studies of business environments within developing countries, in general, or sub-Saharan Africa, in particular. Looking beyond narrow individual project views of performance, the present study’s project society-based business environment is theorised as both constraining and benefiting from the project-learning practices discussed by the respondents.

Article
Publication date: 1 October 2010

L.J. Stainbank

Differential reporting was introduced in South Africa with the enactment of the Corporate Laws Amendment Act 24 2006. Since it was urgent that the standard‐setters provide limited…

779

Abstract

Differential reporting was introduced in South Africa with the enactment of the Corporate Laws Amendment Act 24 2006. Since it was urgent that the standard‐setters provide limited interest companies with interim guidance as to the preparation and presentation of financial statements, South Africa adopted the International Accounting Standards Board’s International Financial Reporting Standard for Small and Mediumsized Entities in its draft form. This study looks at the development of accounting standards for small and mediumsized entities in South Africa. It also examines analyses of prior research on differential reporting and the due process of the International Accounting Standards Board on this topic, as well as the due process of the South African standard‐setter. The paper provides a contextual analysis of the unique reporting environment of South African companies and concludes that adopting the draft IFRS for SMEs may have been the best option for the standard‐setting body in providing relief for limited interest companies from the cost of complying with the International Financial Reporting Standards while still enabling auditors to express an opinion on the financial statements.

Details

Meditari Accountancy Research, vol. 18 no. 2
Type: Research Article
ISSN: 1022-2529

Keywords

Open Access
Article
Publication date: 12 February 2018

Siming Liu and Len Skerratt

Since the UK Companies Act 1981, different reporting standards have developed for different classes of company to reduce the reporting burden on non-listed companies. There are…

3215

Abstract

Purpose

Since the UK Companies Act 1981, different reporting standards have developed for different classes of company to reduce the reporting burden on non-listed companies. There are now different regimes for listed, large private, medium-sized, small and micro companies. This strategy raises the issue of whether earnings quality across the different classes of company is comparable. The paper aims to discuss this issue.

Design/methodology/approach

The paper uses the smoothness of earnings to measure reporting quality across the different types of companies from 2006 to 2013, based on 514,000 observations. Smoothness is an indicator of poor quality.

Findings

The authors find that listed companies have the highest earnings quality, closely followed by small and micro companies. In contrast, large private and medium-sized companies have much lower earnings quality. Overall, the authors find companies which switch between reporting regimes have lower earnings quality. The authors also find that earnings quality is not affected by the small company exemption from audit.

Research limitations/implications

Companies filing abbreviated accounts are excluded since they do not file an income statement. The recent revisions to UK GAAP (FRS 102 and FRS 105) are not examined due to insufficient data.

Practical implications

The Financial Reporting Council’s (FRC) strategy of reducing the financial reporting and auditing obligations for small companies seems not to have significantly affected earnings quality. However, the FRC may need to review the reporting requirements of large private and medium-sized companies and also the option of companies to switch between reporting regimes; in these settings earnings quality appears to be weaker.

Originality/value

The paper studies the effect of earnings quality across the different reporting regimes in the UK. Novel and important features of the study are that the sample covers a wide variety of small and micro companies which have not been analyzed previously; the results are disaggregated by year, for assurance that the results are not driven by a single rogue year; and the authors also address the small company exemption from audit, and the flexibility of non-listed companies to switch between regimes.

Details

Journal of Applied Accounting Research, vol. 19 no. 1
Type: Research Article
ISSN: 0967-5426

Keywords

Article
Publication date: 16 May 2023

Nisansala Wijekoon, Umesh Sharma and Grant Samkin

This paper aims to examine the perceptions of owners and accountants of small- and medium-sized entities (SMEs) on the users and their financial information needs of SME financial…

Abstract

Purpose

This paper aims to examine the perceptions of owners and accountants of small- and medium-sized entities (SMEs) on the users and their financial information needs of SME financial reporting.

Design/methodology/approach

Postal questionnaire surveys with owners and accountants of SMEs were used to identify users and their financial information needs. In total, 1,498 questionnaires were sent to SME owners and accountants. A total of 358 questionnaires were returned, generating 323 useable questionnaires. The management branch of stakeholder theory is used for the study which asserts that company management is expected to meet the expectations of those stakeholders who are more powerful than others.

Findings

The users of Sri Lanka SME financial information were limited to owners, banks and Department of Inland Revenue. Users and financial information needs of owners varied in relation to the size of the SME. Financial information are useful for making capital investment and planning decisions for owners regardless of the size of the SME. By sharing information with outside parties, disclosures can diminish information asymmetries between the firms and its stakeholders. The top three reasons for which owners use SME financial information are for planning purposes, estimating income tax liabilities, and taking marketing and pricing decisions.

Research limitations/implications

Since the study focuses only on the views of owner-managers and accountants of SMEs, the holistic understanding of uses of SME financial information by other user groups cannot be achieved.

Practical implications

The results of this study provide international and local standard setters with an indication of future direction for SME financial reporting.

Social implications

This paper extends existing knowledge on users and their financial information needs of SMEs in developing countries. Consequently, the findings of this paper make a valuable contribution to the work of practitioners such as local and international standards-setters and regulators who may be considering developing/revising financial reporting framework for SMEs either worldwide or in developing countries.

Originality/value

Although SME financial reporting has attracted enormous attention in the recent accounting literature, academic research into SME financial reporting is scant. This paper extends existing knowledge on users and their financial information needs of SMEs in developing countries. The general purpose financial reporting model and the accounting standard IFRS for SMEs in particular would not be applicable to Sri Lankan SMEs unless it modifies to reflect the financial information needs of users of Sri Lankan SME financial information.

Details

Journal of Accounting in Emerging Economies, vol. 14 no. 2
Type: Research Article
ISSN: 2042-1168

Keywords

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