Why Do Firms Opt for Alternative-Format Financial Statements? Some Evidence from France

32 Pages Posted: 2 Feb 2005

See all articles by Yuan Ding

Yuan Ding

China Europe International Business School (CEIBS)

Thomas Jeanjean

ESSEC Business School - Department of Accounting and Management Control

Hervé Stolowy

HEC Paris - Accounting and Management Control Department

Date Written: January 25, 2005

Abstract

Historically, the format of financial statements has varied from one country to another. Recently, due to the attractiveness of their capital markets, the strength of their accounting professions and the influence of their institutional investors, Anglo-American countries have seen the impact of their accounting practices on other nations increase steadily, even influencing the actual format of financial statements. Given that French accounting regulations allow a certain degree of choice in consolidated balance sheet format ('by nature' or 'by term') and income statement format ('by nature' or 'by function'), this study examines a sample of 199 large French listed firms in an attempt to understand why some of these firms do not use the traditional French formats ('by nature' for the balance sheet and 'by nature' for the income statement), instead preferring Anglo-American practices ('by term' format for the balance sheet and 'by function' format for the income statement). We first analyze the balance sheet and income statement formats separately using a logit model, then combine the two and enrich the research design with a generalized ordered logit model and a multinomial logit regression. Our results confirm that the major driving factor behind the adoption of one or two alternative formats is the firm's degree of internationalization, not only financial (auditor type, foreign listing and the decision to apply alternative accounting standards) but also commercial (company size and the internationalization of sales).

Keywords: Disclosure, determinants, financial statements, alternative format, France, logit, generalized ordered logit, multinomial logit

JEL Classification: M41

Suggested Citation

Ding, Yuan and Jeanjean, Thomas and Stolowy, Hervé, Why Do Firms Opt for Alternative-Format Financial Statements? Some Evidence from France (January 25, 2005). Available at SSRN: https://ssrn.com/abstract=657082 or http://dx.doi.org/10.2139/ssrn.657082

Yuan Ding

China Europe International Business School (CEIBS) ( email )

699, Hongfeng Road
Shanghai 201206, Shanghai 201206
China

Thomas Jeanjean

ESSEC Business School - Department of Accounting and Management Control ( email )

Av Bernard Hirsch
Cergy-Pontoise 95021
France

Hervé Stolowy (Contact Author)

HEC Paris - Accounting and Management Control Department ( email )

Jouy-en-Josas Cedex
France
+33 1 39 67 94 42 (Phone)
+33 1 39 67 70 86 (Fax)

HOME PAGE: http://www.hec.fr/stolowy

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