6533b7d3fe1ef96bd1261270
RESEARCH PRODUCT
On the Persistent Understatement of Shareholder's Equity Around Europe
Araceli Mora EnguídanosJuan Manuel García Larasubject
Economics and Econometricsbusiness.industryEquity (finance)Cost accountingAccountingMonetary economicsShareholderAccountingBalance sheetScale effectsBusinessSpurious relationshipUnderstatementMarket valueFinancedescription
We examine the existence of balance sheet conservative practices by listed companies in seven European countries, analysing the differences among them. Our results show that in every country under study there are conservative practices that lead to a persistent understatement of operating assets with respect to market value. This understatement could be mainly attributable to the usage of historic cost accounting as well as to the non-recognition of certain intangible assets. We also find that in code-law based countries balance sheet conservative practices are much more pronounced. Additionally, we analyse whether our results are influenced by a different sample composition, and if spurious scale effects can drive them.
| year | journal | country | edition | language |
|---|---|---|---|---|
| 2003-01-01 | Spanish Journal of Finance and Accounting / Revista Española de Financiación y Contabilidad |