Financial Reporting in European Stock Corporations

The Transparency of Stock Corporations in Europe (R Veil and V Tountopoulos, eds., Hart Publishing, Forthcoming)

Bocconi Legal Studies Research Paper No. 3260426

22 Pages Posted: 19 Oct 2018 Last revised: 16 Nov 2018

See all articles by Giovanni Strampelli

Giovanni Strampelli

Bocconi University - Department of Law

Date Written: October 4, 2018

Abstract

The IAS Regulation and the Accounting Directives have not led to the effective harmonisation of European accounting rules for stock corporations, with the sole exception of the consolidated financial statements of listed corporations (which must be prepared in accordance with the IAS/IFRS). The numerous choices granted to Member States under the IAS/IFRS Regulation and 2013 Accounting Directive give rise to significant differences in the criteria that must be used for preparing financial statements in the Member States. Nevertheless, the options provided under the IAS Regulation and the Accounting Directive have proved to be essential in limiting the accounting-related cost burden for smaller companies and, by providing for different accounting regimes based on the company’s public accountability and size, in striking an adequate balance between undertakings’ and investors’ interests. Hence, this paper ague that in order to strike an adequate balance between preparers’ costs and users’ information needs, it is essential to differentiate between applicable accounting regimes depending on the company’s public accountability and size. Therefore, the Commission’s proposal to introduce a simplified financial reporting regime for small companies listed on MTFs is appropriate, even though it further limits the harmonisation of accounting rules for listed companies. Moreover, although it results in further differentiation within the EU accounting regime, listed companies should be required (following the UK Strategic Report model) to prepare a clear and concise narrative report focusing on essential aspects of the company’s business, circumstances, strategies, and governance with the aim of enhancing the effectiveness of IAS/IFRS financial statements and of making them more suitable for meet investors’ needs.

Keywords: Accounting disclosure, Financial reporting, IAS/IFRS, IAS Regulation, Accounting Directive

JEL Classification: K22, M41

Suggested Citation

Strampelli, Giovanni, Financial Reporting in European Stock Corporations (October 4, 2018). The Transparency of Stock Corporations in Europe (R Veil and V Tountopoulos, eds., Hart Publishing, Forthcoming); Bocconi Legal Studies Research Paper No. 3260426. Available at SSRN: https://ssrn.com/abstract=3260426

Giovanni Strampelli (Contact Author)

Bocconi University - Department of Law ( email )

Via Roentgen, 1
Milan, 20136
Italy

Register to save articles to
your library

Register

Paper statistics

Downloads
49
Abstract Views
489
PlumX Metrics