Financial Reporting for Joint ventures and Capital Markets Reactions
AbstractImportant changes have been recently brought into the field of consolidation by the IASB. With the aim of ensuring convergence between the International Financial Reporting Standards (IFRSs) and US GAAP, the new IFRS 11- concerning the accounting of interests in joint arrangements (joint operations or joint ventures) -replaced the previous IAS 31. The core argument of the present paper is that IFRSs are designed to provide relevant financial information to a wide range of users. Higher the quality of the information supplied by financial reporting, better the outcomes of the decision making process of the participants on capital markets, lower the information asymmetry within the respective markets. Thus, the working hypothesis of this paper is that the changes in financial reporting for joint ventures can reduce the information asymmetry issues; and that for this reason, the topic must be under careful scrutiny. Hence, our approach takes into consideration the recently issued IFRS 11, which is of critical importance to the nature and quality of the financial information transmitted by the issuers to the market. The expected outcome of such an analysis resides in the idea that these changes in financial reporting are a reflection of the role played by the international joint ventures on the global markets and, extensively, within the entire economic system.
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Bibliographic InfoPaper provided by Department of Management, Università Ca' Foscari Venezia in its series Working Papers with number 23.
Length: 16 pages
Date of creation: Dec 2012
Date of revision:
IFRS; joint venture; capital market;
Find related papers by JEL classification:
- M41 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Accounting
- M48 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Government Policy and Regulation
- G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies
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- Isabel Costa Lourenco & Jose Dias Curto, 2010. "Determinants of the Accounting Choice between Alternative Reporting Methods for Interests in Jointly Controlled Entities," European Accounting Review, Taylor and Francis Journals, vol. 19(4), pages 739-773.
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- repec:fth:michin:282 is not listed on IDEAS
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