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Does business model affect accounting choices? An empirical analysis of European listed companies

Listed author(s):
  • Ugo Lassini

    ()

    (Catholic University of Sacred Heart)

  • Andrea Lionzo

    ()

    (Catholic University of Sacred Heart)

  • Francesca Rossignoli

    ()

    (University of Verona)

Registered author(s):

    Abstract Financial accounting research increasingly includes business model (BM) constructs, but the ability of financial reporting to capture BM characteristics has not been verified. This study empirically explores the links between BMs and accounting choices by clustering a sample of 103 European listed companies according to an innovative, nonlinear algorithm (self-organizing map) that uses pertinent industrial, strategic, governance, and financial variables to uncover different dimensions of a BM. The authors investigate accounting choices (accounting measurement, accounting treatment, and disclosure level) by companies that belong to the different identified BMs. The analysis of the relations between different company BMs and their accounting choices indicates no significant connections, which offers empirical confirmation of the criticisms regarding the inability of financial reporting to represent (or even consider) a company’s BM. The results suggest further attempt to capture BM in financial reporting, which requires regulators to establish accounting standards that acknowledge the value creation processes of an entity and incentivize managers to represent those processes.

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    File URL: http://link.springer.com/10.1007/s10997-015-9321-5
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    Article provided by Springer & Accademia Italiana di Economia Aziendale (AIDEA) in its journal Journal of Management & Governance.

    Volume (Year): 20 (2016)
    Issue (Month): 2 (June)
    Pages: 229-260

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    Handle: RePEc:kap:jmgtgv:v:20:y:2016:i:2:d:10.1007_s10997-015-9321-5
    DOI: 10.1007/s10997-015-9321-5
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