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School’s International Finance Reporting Institute Brings Together Doctoral Students to Present Research Studies on Financial Issues

December 17, 2014
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Nearly 30 doctoral students and faculty from universities around the world came together to explore new research and network with fellow accounting academics.

How did European companies try to manage their earnings during the global banking and equity crisis?  Do the personal characteristics of International Accounting Standards Board (IASB) members affect their preferences for standards based on strict rules or general principles?

Doctoral students from universities in the United States, Europe, Australia and other countries presented their research on timely questions like these at the 2014 Conference on Extending the Boundaries of International Accounting held at the School in December.

The conference, sponsored by the School’s International Financial Reporting Institute (IFRI) and Deloitte, drew about 30 students and faculty members.

Conference organizer Peter Wysocki, professor of accounting at the School, said this second annual IFRI conference provided opportunities for young accounting researchers to present their work, while networking with other professionals. "Our conference covered an eclectic group of interesting topics in studies that looked across countries and different institutional settings," he said.   

Several attendees emphasized the value of getting to meet and learn from other accounting researchers. "I enjoy interacting with other faculty and students here," said Encarna Guillamon Saorin, who recently joined Universidad Carlos III de Madrid in Spain as an assistant professor.  "This is my second year at the conference, which has been a great value to me professionally."

Carlo Gallimberti, a doctoral student at Bocconi University in Milan, Italy, said the conference presentations gave him new perspectives on international accounting. "I'm learning from the questions being asked by other students and faculty, as well as from the researchers themselves," he said. 

Claudia Imperatore and Marco Trombetta of IE Business School, Madrid, Spain, presented their study, “Earnings Management in Tough Times: An International Comparison of Banking and Equity Crises.” It focused on data from 3,520 companies in France, Germany, Italy, the UK and Switzerland.

Because the equity and banking markets hate financial uncertainty, Imperatore said that "smoothing" the reporting of corporate earnings can reduce the perceived risk for shareholders and lenders. "Our hypothesis is that firms are more likely to smooth earnings as the level of financial distress increases," she said. "During crises, investors also become more concerned about the reliability of a firm's financial statements."

Summing up the study's findings, Imperatore said there appears to be a positive relationship between the intensity of a financial crisis and the level of income smoothing. "Firms operating in countries with weaker economies are more likely to smooth their earnings when there is turbulence in the equity market," she said. 

Marcus Witzky, from Humboldt University of Berlin, examined “The Influence of Standard Setters on the Properties of International Financial Reporting Standards,” with an emphasis on the professional backgrounds of members of the IASB, an independent body founded in 2001 that develops and approves International Financial Reporting Standards. 

Witzky examined 73 IASB decisions to see which of the 22 IASB trustees voted in favor of a change in standards and which members dissented.   "There has been significant increase in rules-based standards in the past decade, as accounting practitioners want more guidance," he said.  "However, professionals from common law nations were more supportive of standards based on principles, while those from civil law counties tended toward rules-based standards."

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