Reporting : Financial statement

mostly on the quality of accounting information and reporting. The field of international accounting concerns multinational firms.

Economic event > Measurement > Recording > Reporting

Reporting: Financial statement

• Balance sheet

• Income statement

• Statement of cash flow

• Statement of returned earnings

• Notes to the accounts

Reporting was one step of accounting but now it becomes a process and this process is part of the global strategy of the firm. We need forecasted data on the firm. Because of development of financial markets (IT, size, n° of listed, companies, structure, and control mechanisms), information took importance.

Real time reporting vs. periodic reporting

Flow of capital

Companies Capital market economy Financial markets

Financial information

Who has to regulate markets?

• Regulatory agencies (AMF, SEC)

They regulate the markets by controlling the information.

• Financial markets (Euronext, NYSE)

• Standards setters (Commission européenne, OEC etc.)

• Professional bodies

Type of (financial) information disclosed by companies:

• Mandatory (Listed companies etc.)

o Annual report

o Interim report

o Quarterly report

• Voluntary

o Some type of forecasted data

o Earnings management

What are the main reasons and consequences to voluntary disclose information?

• Because mandatory disclosure lack of information

• Financial market is competitive, and sometimes companies have to correct what people are saying about the companies. (Reputation etc.)

• To attract investors, to show performance etc.

• The consequences are that firms would have to continue to give information (for how long, what type etc.). Moreover, voluntary information has to be complete or the market would think that there is a problem.

• Voluntary information is not standardized and it’s difficult to compare them.

Interested parties:

• Regulatory agencies

• Current investors

• Potential investors

• Bankers

• Financial analysts

• Government

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