Revista de Contabilidad - Spanish Accounting Review 2024, V. 27 N. 1

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    Back to goodwill amortisation and the financial performance of public and private firms in Spain
    (Universidad de Murcia, Servicio de Publicaciones, 2024) Peón, David; Ruiz, Fernando
    We take advantage of the change in goodwill regulation in Spain after 2016, to contribute with a comprehensive analysis of a scenario barely studied in the recent literature: the inverse transition from goodwill impairment to the systematic amortisation of goodwill. Using a database with the individual financial statements of all Spanish non-financial firms, both listed and non-listed, with positive goodwill on balance, we contribute in two instances. On the one hand, we seek to obtain evidence of whether managers behaved opportunistically during the impairment regulation period using a test of the determinants of goodwill impairment recognition. On the other hand, through a differences-in-differences approach against a sample of4,000 control firms, we test the differential impact of the change in regulation on the return on assets of those firms with goodwill in their balances. Our results are in line with extant research suggesting that the systematic amortisation of goodwill paired with a periodic impairment test limits earnings management practices and help investors assess the economic performance of a firm.
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    Impression management in bankruptcy: An analysis of the narratives in listed companies
    (Universidad de Murcia, Servicio de Publicaciones, 2024) Moreno, Alonso; Camacho-Miñano, María del Mar
    Managers tend to use opportunistically corporate narrative disclosure when financial performance is poor. However, there is little research on impression management in situations of extreme distress, such as bankruptcy. This paper analyzes ten textual characteristics of corporate reports at two moments in time, the last year just before entering the legal bankruptcy procedure (sick year) and five years earlier (healthy year). Specifically, it investigates the management reports of all bankrupt listed companies in Spain from2005 to 2019. Our findings near bankruptcy only show behavior that may be compatible with impression management in relation to length and positive language. Litigation risk associated with bankruptcy may condition managers’ attitudes to using narratives in a self-serving manner. Our results are also robust if we only test the most financially distressed bankrupt companies. This paper contributes to the understanding of impression management in companies in conditions of extreme financial distress.
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    Implementing mandatory audit firm rotation: Effects on audit and non-audit fees
    (Universidad de Murcia, Servicio de Publicaciones, 2024) Basioudis, Ilias G.; Cuellar-Fernández, Beatriz; Garcia-Lacalle, Javier
    The 2014 reform of the European Union (EU) regulation on auditing includes mandatory audit firm rotation and a significant limitation of the provision of non-audit services by the audit firm to their existing clients. This paper analyses the changes in audit fees, and non-audit fees, as well as in their proportion, when there is a switch of audit firms, before and after the new regulation. The analysis is carried out for the Spanish listed companies from 2011 to 2018 using two types of analyses, descriptive/comparative and multivariate, panel data, regressions. As expected, the new EU regulation has resulted in a significant increase in audit firm switches. The results show that, when there is a change of audit firm, the incoming firm offers a significant discount to the new client with the outgoing firm. This is the case before and after the reform, and for both voluntary and mandatory switches after the reform. In addition, the reform has led to a reduction of non-audit fees, which is especially evident after a voluntary audit firm switch. We conclude that audit firms seem to be willing to take on the additional cost of auditing a new company to gain clients.
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    Large shareholders and agency costs of debt. Evidence from Spain
    (Universidad de Murcia, Servicio de Publicaciones, 2024) Álvarez-Botas, Celia; Fernández-Méndez, Carlos; González, Víctor M.
    This paper analyses the influence of large controlling shareholders on the terms of bank loans for a sample of 984 loans to 261 non-financial Spanish public and private firms over the period 2001-2017. The results show that the presence of large controlling shareholders increases the interest rate spread of bank loans only in public firms, whereas the influence is insignificant for private firms. Similarly, a less evenly balanced distribution of ownership among large shareholders is associated with higher loan spreads for public firms. Our results reveal that large controlling shareholders expropriate wealth from other investors in public firms, in line with the existence of lower benefits for borrowers due to having large controlling shareholders when they have other internal and external mechanisms of control.
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    The relationship between public debt and privatisation: the moderatingroles of political ideology and electoral cycles
    (Universidad de Murcia, Servicio de Publicaciones, 2024) Cuadrado-Ballesteros, Beatriz; Peña-Miguel, Noemí
    Using a sample of 25 European countries between 1995 and 2013, this study shows a bidirectional relationship between privatisations and public debt. Firstly, our findings suggest that governments with higherlevels of debt tend to privatise state-owned enterprises (SOEs) to a greater extent than less-indebted governments. Subsequently, the results show that privatisations effectively reduce indebtedness. This meansthat causality between privatisation and public debt should be considered in future studies. In addition, wehave found that such a strategy is used more by right-wing governments, which implies the existence of partisan effects. However, our findings do not support any effect caused by electoral cycles.