"Is accounting a matter for bookkeepers only? The effects of IFRS adoption on the financialisation of economy" (A. G Haldane, A. Migliavacca, V. Palea, Cambridge J Econ 2024 - and in "Financial Times")
Pubblicato: Martedì 6 agosto 2024
Is accounting a matter for bookkeepers only? The effects of IFRS adoption on the financialisation of economy
Andrew G Haldane, Alessandro Migliavacca, Vera Palea
Cambridge Journal of Economics, Volume 48, Issue 3, May 2024, Pages 489–512, Journal article
Andrew G Haldane, Alessandro Migliavacca, Vera Palea
Cambridge Journal of Economics, Volume 48, Issue 3, May 2024, Pages 489–512, Journal article
Abstract
The process of financialisation has been extensively studied and several stylised facts identified. Short-termism is one of these. This article analyses the role that changes in accounting rules have played in increasing short-termism in company management. Our study considers the adoption of the International Financial Reporting Standards in the European Union (EU), showing that the new accounting standards have altered companies’ sensitivity to investment opportunities, leading to underinvestment in the real economy. In doing so, our article highlights the public-policy profile of accounting standards setting and possible tensions with EU societal objectives. To the best of our knowledge, this is the first study empirically analysing the role of accounting rules in the financialisation of economy.
JEL codes
The process of financialisation has been extensively studied and several stylised facts identified. Short-termism is one of these. This article analyses the role that changes in accounting rules have played in increasing short-termism in company management. Our study considers the adoption of the International Financial Reporting Standards in the European Union (EU), showing that the new accounting standards have altered companies’ sensitivity to investment opportunities, leading to underinvestment in the real economy. In doing so, our article highlights the public-policy profile of accounting standards setting and possible tensions with EU societal objectives. To the best of our knowledge, this is the first study empirically analysing the role of accounting rules in the financialisation of economy.
JEL codes
D22 - Firm Behavior: Empirical Analysis; G3 - Corporate Finance and Governance; M41 - Accounting
See also (mentioning the article):
Blessed are the bean counters — except when it comes to growth
by A. HALDANE
by A. HALDANE