强制性会计信息披露外文翻译.docx

强制性会计信息披露外文翻译.docx

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强制性会计信息披露外文翻译

外文翻译

MandatoryAccountingDisclosure

MaterialSource:

MandatoryAccountingDisclosurebySmallPrivateCompaniesAuthor:

BenitoArrunada

Therearesubstantialdifferencesintheregulationindifferentcountriesonfinancialdisclosurebyprivatecompaniesand,inparticular,onpublicationoftheiraccounts.IntheUSA,Japanandsomeothercountries,mostprivatecompanies,whatevertheirsize,arenotobligedtodisclosefinancialinformation.Incontrast,intheEuropeanUnionallcompaniesarerequiredtofiletheiraccountswithapublicregister.Mostothercountriesalsorequiremanyoftheirprivatecompaniestopubliclyfiletheiraccounts.

Discussionsofthesedisclosureandpublicationrequirementshaveledtodisparaterecommendationstoslightlyexpandpublicationrequirements,maintainthemandreducethem,Singapore.Morerecently,aspartofitsinitiativetosimplifythebusinessenvironmentandlessenadministrativeburdens,theEuropeanCommission（2007）hasalsoproposedtoexemptsmallcompaniessothattheywouldnotnecessarilyberequiredbynationallawtopublishtheiraccounts.TheCommissiongroundsitsproposalontheargumentthatforsuchcompaniespublishingtheaccountscausesconsiderablecostwithnosignificantbenefit.Ontheonehand,accordingtotheCommission,therequirementconstitutesamajoradministrativeburden.Ontheother,itisinconsequentialif—whengivenfreedomtodiscloseornot—smallfirmschoosenottodisclosebecausetheiraccountsareonly“usedbyalimitednumberofstakeholders,suchascreditinstitutionsandsuppliersthathavethepossibilitytorequirefinancialinformationdirectlyfromthecompany”.

Mandatorypublicationofaccountsbyprivatecompaniesrelatestoseveralstrandsoftheeconomic,accountingandfinancialliteratures:

deregulationofbusinessformalities,mandatoryfinancialdisclosure,andinvestorsprotectionandcreditinformation.Findingsinalltheseareasthusprovidecomplementaryinsightsontheissueunderdiscussion.

Sincethe1960s,therehasbeensubstantialcontroversyonthebalanceofcostsandbenefitsandtheoptimalcontentofmandatoryfinancialdisclosure.Inthe

currentregulatoryframeworkoftheUSA,however,mostofthesediscussionshavefocusedonmandatorydisclosurebypubliccompanies—thatis,companiessellingsharesorbondstoindividualinvestorsinstockexchanges.Thesepubliccompaniesarerequiredbylawtonotonlyfilefinancialinformationpubliclyonaperiodicbasisbutalsotodiscloseotherinformationonthecompany,providedetaileddataonnewissuesofsecuritiesandreportanytradebyinsiders.

EventhoughtheEuropeanCommission’sproposalreferstothemandatorypublicationofannualaccountsbysmallprivatecompanies,partofthediscussiononmandatorydisclosurebypubliccompaniesisapplicable.Otherpartsoftheanalysisaresubstantiallydifferent,however,becauseofdifferencesinthegovernancestructure,sizeandavailabilityofinformationofbothtypesofcompanies,aswellasdifferencesinthecontentsoftheinformationbeingmandatorilydisclosed.Inparticular,previousresearchhasfocusedonhowmandatorydisclosureforpubliccompaniesaffectsthevalueoftheirequitybyfacilitatingornottransactionsonsuchequity.Butthemaininterestforprivatecompaniesliesinknowinghowpublishingtheiraccountscouldhelptheirtradingparties（mainlybanksandsuppliers）estimatetheircreditrisk,thusexpandingtheiraccesstocreditandloweringitscost.Themaineffectshouldbetoreduceinformationasymmetryincredit（includingtradecredit）transactionsinsteadofinequitytransactions.

Inaddition,giventhatthesharesofpubliccompaniesaretradedinthestockmarket,itispossibletoestimatetheimpactofmandatorydisclosureonthevalueofthepubliccompanies.However,evenifthereductioninthetransactioncostsofcreditcausedbymandatorypublicationofaccountsalsoincreasesfirmvalue,wecannotmeasurethiseffectbecausewelackmarketpricesforequitysharesinprivatecompanies.Therefore,withoutacomprehensivemetricforevaluatingtheimpactofmandatorypublicationofaccounts,wecanonlyaspiretobuildinganenlightenedqualitativeinventoryofcostsandbenefits.Thevolumeofcreditcontractedinaneconomydependsontwofactors:

informationavailableondebtorsquality,andtherightsthatthelegalsystemgrantstocreditorsincaseofdefault.Fortheavailabilityofinformation,thefactoronwhichwearemostinterested,empiricalevidenceshowsthatthevolumeofcreditgrowswhenbankssharemoreinformationondebtorsandwhenthequalityofcreditregistriesimproves.Itseemsthatthebetterthecreditorsknowthequalityandrecordofpotentialdebtors,thelowerthetransactioncostsofcredit,probablybecauseofbothimproveddebtorsincentivesandeasieravoidanceofadverseselection.Aswewillsee,themainreasonforthe

publicationofaccountsisthatitallowsimprovedassessmentofcreditriskforbothindividualtransactionsandbankandmacroeconomicregulation.

Distortionofcompetition

Publicationofaccountsmightalsocauseprivatecoststothedisclosingfirmbyinformingitscompetitors,whichmightalsodistortcompetition.However,thiseffectseemsunlikelytobesubstantialwhensmallcompaniesareinvolved.Atleast,thesecostsareclearlysmallerthanthoseofthedisclosurenowcommonlyrequiredfrompubliccompanies.Ausefulcomparisonwouldbethatbetweentheimpactofpubliclyfilingtheannualaccountswiththatofannouncing,forinstance,thecancellationofaresearchprogramme.Doubtremainsonthispoint,however,notforthemicroandsmallcompaniesconsideredbytheEuropeanCommissionbutformedium-sizedorevenlargeprivatecompanies,forwhichdisclosuremaybequitesensitive,giventheirsizeandpresenceinconcentratedanddifferentiatedmarkets.

Mappingappropriablebenefits

Publicationofcompanyaccountsalsoprovidesbenefitstothecompaniesinvolved,totheirtradingpartnersandtothirdparties.Thissectionexaminesthosewhichareappropriablebythedisclosingcompany.

Benefitsfordisclosersandtheirpartners

Benefitsfordisclosingcompaniesandtheirtradingpartnersarisefromreducingtheinformationasymmetrybetweenthem:

publishingtheaccountsgrantsaccesstopotentialandcurrenttradingpartnerstothehistoricalrecord,currentfinancialpositionandprofitabilityofthedisclosingfirm.Thisreductionininformationasymmetryisespeciallyvaluableintransactionsthatembodyfutureobligationsforthefirm:

clientspurchasingdurablegoods,allpartiesinvestinginfirm-specificassets,minorityshareholdersand,especially,tradeandfinancialcreditors.Understandably,moretransparentfirmshavebeenfoundtoincurlowercostsofdebtandequitycapital.

Furthermore,publishingtheaccountsmaybemorecredibleandlesscostlythancommunicatingthemindividuallytocontractualpartiesorhandingthemonlytothosepartieswhorequestthemexplicitly.Credibilityisgainedbecausefilingtheaccountswithanindependentthirdparty（theregister）commitsthefirm,asaccountsalreadyfiledcannotbemodifiedandfutureaccountswillhavetobeconsistentwiththosefiledinthepast.Costsarereducedbecauseitisnolongernecessarytodeliverthemtoahighnumberoftradecreditors,andprospectivecreditorsorthirdpartieswillnolongerhavetoaskfortheaccountstobedeliveredtothem.

Individualdisclosureasanalternativetopublicdisclosure

ThealternativesolutionproposedbytheEuropeanCommissionisforthecreditortoaskfortheborrowersfinancialstatements.Thissolutionisproblematic,notleastbecausethereareoftenmorethantwopartiestothetransaction.

Informationprovidedtoapartyinaone-to-oneinteractionisoftenlesscrediblethanthatprovidedtoallpotentialpartiesbyfilingitinapublicregistry.Someevidenceonthisisgivenbythecommonpracticeinbankingof,asafirststep,checkingloanapplications（whichoftenincludespecificallyadaptedfinancialstatements）againstreportspreparedbybusiness.informationagencies.19Onemayassumethatifsomecreditapplicantsmakeuptheiraccountswhendealingwithbanks,theyareevenmorelikelytodosowhendealingwithsuppliers,giventhatsuppliersarenotexpertsincreditevaluation,donothavesuchreadyaccesstoadditionalinformationandarelesslikelytobeapartyinfuturetransactions.

Inaddition,askingcontractualpartiesforsensitiveinformationisnotalwaysasensiblenegotiatingstrategy,becauseitmaydestroytrust,whichmightbeneededtoadaptthetransactioninthefuture.Itmayforcethetransactiontobemoreformalandlegalistic.Thisseemsespeciallyimportantwhenmakingcreditdecisionsasby-productsofcommercialtransactions,manyofwhichneedfutureadaptation.Ontheotherhand,explicitcontractingforsafeguardsisrelativelymorecommonandacceptedforcreditthanforcommercialtransactions,andfeweradaptationsareneeded.

Mappingexternalities

Everytimeacompanypublishesitsaccounts,itbenefitsthirdpartiesinwaysthatcouldhardlycompensatethedisclosingcompanyinanypracticalway.Aggregatedinformationonindividualfirms,evenifverysmall,isvaluableforcreditinformationagencies,toimprovetheaccuracyandpredictivepoweroftheircreditratingmodels;foranalystsandinvestors,asitallowsthemtodocomparativeanalysiswhenallocatingcapitalamongfirmsandindustries;forcompetitorsandcompetitors'investors,whenanalysingtheindustry;forregulatorsandpolicymakers,whenmakingdecisions;forcentralbanks,whenevaluatingthelevelofindebtnessofthe