Browsing by Author "Leander, Carl"

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    R&D accounting practice in Swedish public IT-groups
    (2012-08-06) Hai Nguyen, Thanh; Leander, Carl; University of Gothenburg/Department of Business Administration; Göteborgs universitet/Företagsekonomiska institutionen
    Background: Companies applying the International Financial Reporting Standards (IFRS) in their accounting, e. g. all public groups in the European Union, face several items for assessment when accounting for their research and development expenses. Research expenses are to be treated directly as costs, but development expenses are to be capitalised as assets if they are assessed to meet certain requirements. These judgements affect the financial reports and the image conveyed to their users, such as investors.Purpose: The purpose of the study is to describe the development of R&D accounting practice in Swedish public IT-groups since the implementation of IFRS in 2005, and also discuss causes and consequences of said accounting practice. Demarcation: The study has been limited to Swedish groups listed in the IT-category of the Nasdaq OMX Stockholm stock exchange in April 2012. Groups that do not have any R&D expenses or have not applied the IFRS for five years or more have been excluded. Method: A combination of quantitative and qualitative research has been used. Quantitative data regarding the companies’ R&D expenses has been collected from annual reports and summarised in tables and charts. Then, a more qualitative approach has been applied to analyse and discuss the data, to try to find causes and consequences of the accounting practices. While analysing causes, we have studied four companies more deeply. Findings and conclusions: Our study indicates there is a large spread in R&D accounting practice in the Swedish IT-industry. Although the IFRS provides regulation on how to manage R&D expenses, companies apply these rules in very different ways. We also theorise that companies with a high equity ratio tend to use the immediate expensing method to avoid disclosure of information to competitors as they can afford it. In addition, we argue that the quality of the financial reports is reduced by the differing accounting practices, with comparability between companies being the main issue. Suggestions for further research: We would like to study closer if the familiarisation of the IFRS has led to a downgrade in comparability between companies and if a rule-based regulation on R&D would be better. We would also like to know how R&D accounting was applied in the IT-industry before the familiarisation of the IFRS and compare it to our study. Additionally, we would find it interesting to see how R&D is treated in other industries besides IT.
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    The Information Content of Bank Liquidity: An evaluation of links between banks ’ liquidity ratios and financial performance
    (2014-10-07) Nguyen, Thanh Hai; Leander, Carl; University of Gothenburg/Graduate School; Göteborgs universitet/Graduate School
    Background and problem: Since the financial crisis of 2007-2008, it has been widely argued that part of the banking crisis was due to bad liquidity management by the banks themselves. An example of this ongoing discussion is the new increased liquidity requirements of the upcoming Basel III regulation. This discussion raises the question if accounting data on bank liquidity has any information content, and if it is in fact related to the performance of banks. Purpose: The objective of this study is to evaluate the relation between liquidity accounting ratios and financial performance in the banking sector, and thereby assess the usefulness and information content of said ratios. This will be done by testing whether banks’ different liquidity ratios are significantly related to their performance indicators in the same period. Coverage: The study covers accounting data and stock market data from the years of 2005-2012. The study includes listed banks that originate from the US and the EU, with total assets greater than USD 1 billion. Method: The study has been designed as an explanatory, deductive, and positivistic study. The main method used has been multivariate regression analysis, and through this hypotheses have been tested by studying the coefficients from the regression output. Findings: The findings of the study indicate that a bank’s liquidity level is significantly related to its stock returns in the same period, in line with the hypotheses. Further, one of the chosen liquidity ratios is related to the return on equity of banks, also in line with the hypotheses. This could indicate some links between liquidity ratios and financial performance. Suggestions for further research: Include more geographical areas. Compare different accounting standards. Apply the study to other industries. Conduct a predictive study testing the predictive ability of liquidity, based on the findings that the variables are indeed related in the same period. Limitations: Findings are only applicable to banking industry. Assumptions on causality and accounting standard similarity made. Control variables are limited.