El diminutivo en relaciones afectivas

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economic growth than countries which neither adopt nor adopt but fail to adjust. Two other studies which use adapters are those conducted by Elbannan (2011) in Egypt and Outa (2011) in Kenya, and in both studies, there was no evidence of less earnings management. The orientation of Egyptian firms is debt-financing and this must have accounted for the results. In Kenya, the IFRS lack legal backing; moreover, there is gross shortage of qualified accountants in the country (Outa, 2011). All of these reasons account for the borderline discovering in the two adapters countries. Rao & Warsame’s study (Rao &Warsame, 2014), which pulls firms across adapter countries, suffers from poor design. Nigerian firms (as an example) were not represented in their study because the country adopts IFRS in 2012: their study uses 1995 to 2005 data, and before the mandatory adoption in Nigeria, only one oil firm (Oando Plc) and about five banks voluntarily adopted IFRS, and even the latter were excluded in their design. In blunter terms, the study fails to capture Nigeria and, perhaps, several other African countries. Moreover, voluntary and mandatory firms were included in both pre-and-post IFRS dichotomy of their design without a control for their interaction (cf. Houqe, Easton & Zijl, 2014; Christensen, Lee, Walker & Zeng, 2015). Furthermore, a sample with few representative firms from each country lacks valid generalization at both the country and regional levels.

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is that fair value losses reduce the value of a company’s assets as well as net income. A persistent fall in market value of a company’s assets will reduce capital to a level that shareholders might begin to consider recapitalisation, re-organisation or liquidation, even though the company did not actually suffer the losses, for the decline in market value may be due to some temporary events—external or internal. In the same vein, fair value profits increase the assets value of a company as well as net income, and this can influence the amount of cash dividend paid to shareholders. In a word or two, the distribution of dividends from profit that is influenced by fair value profit does not protect creditors of the company; contrariwise, the distribution of dividends from profit that is influenced by fair value loss is exploitative of shareholders. Thus, there is some truth in the statement that fair value profit or loss might influence the payment of dividends and this would not be in consonance with the notion of capital maintenance (Jermakowicz, 2004; Strampelli, 2011). Therefore, it ought to be detected whether changes in dividends correlate with changes in unrealised profits or losses. The thesis is that if changes in dividend paid are associated with changes in unrealised profit, then there is evidence that unrealised profits influence the size of dividend paid to shareholders. It may be argued, however, that fair value profits or losses do not affect or alter the cash position of a company but if a company has sufficient cash to back up profits, management might be tempted to pay dividends that are financed by unrealised profit, hoping that such an action will elevate their stock prices (cf. Bloom, 2011).

The IASB appears inactive about the allegation of inadequate attention to the capital maintenance system because the sole purpose of the financial statements is to inform, not to

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determine distributable profit or erosion of subscribed capital. To quote Hans Hoogervorst, chairperson of the IASB:

(…). I share the concerns of those who are worried about excessively generous dividends and unjustified share buy-backs. But this should not be dealt with by phoney accounting. It should be dealt with by legislation and by regulators as is the case in most countries in the world (IASB Speech, 2015).

This escapist argument, however, is not catching on insofar as the financial statements remain the only valid instruments to determine distributable profits or impairment in subscribed capital due to losses. Nevertheless, assuming arguendo that the IASB is correct, then disclosure to inform should be complete; for example, the statement of changes in equity discloses the value and structure of owners’ equity as well as its changes over a period but it fails to align any changes in capital with changes in circulatory working capital, as working capital is the means by which management increases equity capital. As Abdel-Khalik (2011) observes, accountability is not stewardship; therefore, providing summary quantitative data about whatever is managed as capital is accountability but lacks explanations for how capital is managed. The statement of changes in equity is fundamental because the long-term financial goal of a business entity is increase in equity (Nowak, 2013) but additional disclosure on stewardship is important to check on management’s claim of whatever is reported as capital maintenance. The accounting standards recognise innovative qualities so that origin and persistence of accounting practices could come to play (Hopwood, 1987) but there is the need to provide data for shareholders to adjudge whether management claims of capital maintenance is real. The accounting profession has suffered scandals in the past due to collapse of companies in the face of ‘good accounting figures’; therefore, what the accounting profession needs is a reporting model that is based on accounting practices relevant to both management strategies and accountability. Management

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has a freedom to act, implying that management can apply strategies to increase resources;

however, there should be congruency between managerial strategies and increase in resources as a test of transparency and accountability (stewardship), which in the first place led the IASB to increase the disclosure requirements. The IFRS Conceptual Framework holds that the objective of financial reporting is to provide financial information that is useful in making decisions and in evaluating whether the management has made efficient or effective use of the resources entrusted to it. In some other words, the IFRS Conceptual Framework emphasises decision usefulness and stewardship. If this inclination is correct, then it ought to be detected whether management’s claim of capital maintenance is supported by its managerial strategy. The thesis is that if managerial strategy corroborate management claim of capital maintenance, then the statement of changes in equity provides sufficient information on the maintenance of subscribed capital and this would sustain the inactiveness of the IASB.

Furthermore, the concept of capital maintenance holds that in order to protect creditors, dividend should be paid out of profit, not capital. This suggests that profit should be determined at the end of a target period to decide on the amount of dividend to pay shareholders. The literature documents two methods of profit determination: (1) the surplus approach, and (2) the double account system. The former method values assets and liabilities at market prices and determine profit as the difference in net asset valuations adopted at the beginning and end of the financial period (Kehl, 1976). In contrast, the double account system places most importance on the financial transactions in which the specific reporting entity is directly involved, and little or no emphasis on the current market values of assets, particularly non-current assets. The double account system is driven primarily by the convention of revenue recognition and the matching

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principle of relevant costing (Ardern & Aiken 2005), and the production of a detailed profit or loss statement is integral to the objective of the double entry system, namely, to demonstrate stewardship or accountability about how capital raised by companies is used, and to distinguish capital from revenue expenditure (Morris, 1993).

The accounting profession had rejected the surplus approach on grounds that it fails to match periodic costs against revenues (Ardern & Aiken, 2005) but fair value accounting and the requirement to provide summary quantitative data on capital that is claimed to be maintained (IAS 1) are characteristics of the surplus approach (Jones & Aiken 1994); thus, there is a paradigm shift from the double account system to mixed methods. The codification of fair value rules in IFRS 13 to avoid the touted abuse (kaya, 2013) substantiates the paradigm shift assertion but remains an open ground for mischief because a value assigned on what an asset would be sold for is hypothetical and subjective no matter the activeness of the market (King, 2008).

Therefore, it ought to be determined the extent to which fair value accounting has closed the gap between the surplus and double account system.

The motivation for this study came from the IASB claims to work in the public interest by fostering trust, growth and long-term financial stability in the global economy (IASB Speech, 2015). This claim calls for empirical evidence if the IASB’s claim of transparency, accountability, and efficiency is to be admitted as real. Thus, the study tests whether the codification of fair value accounting has reduced subjectivity; whether fair value losses and profits influence dividends distribution; and whether managerial claim of capital maintenance aligns with managerial strategies. On the first objective, the distribution of net income plus tax expense under the double entry and the surplus methods were compared to learn the extent to

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which fair value accounting has closed the gap between the two methods of profit determination.

The thesis being that if the gap is insignificant then there is objectivity in fair value accounting. It is fair to generalize the two approaches because items in the statement of profit or loss are at current prices, and with fair value accounting, the net assets are also at current prices. Moreover, fair value gains and losses are now recorded in the income statement so that any significant difference will indicate the extent to which management’s estimate of fair values is subjective.

On the second objective, the study correlates changes in dividends with changes in unrealized profit or loss, the thesis being that if changes in unrealized profit are associated with changes in dividends paid, then there is some evidence that unrealized profit or loss influences the size of dividend paid to shareholders. On the third objective, the critical mandate is to explain stewardship in terms of capital maintenance and managerial strategy, the thesis being that if management’s claim of capital maintenance is genuine then changes in equity should correlated with changes in working capital since the circulation of working capital is the means by which management can increase capital, and this would signal stewardship to market participants, and hence explains value relevance of stewardship. Cross-sectional distributions of changes in equity and changes in working capital were correlated to learn the extent to which management’s claim of capital maintenance agrees with the strategy on ground to increase capital resources. Then, a regression of stewardship on changes in equity (capital maintenance) and changes in working capital (managerial strategies) was embarked upon to explain value relevance of management’s stewardship.