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Projects. Social Sciences

What should corporate governance and accountancy information be like in order to facilitate access by the company to sources of funding?

Lead Researcher: Juan Manuel García Lara
Research Centre: Universidad Carlos III de Madrid.

Synopsis:   

Juan Manuel García Lara In the current context of crisis, business access to sources of funding is crucial so that investments can be made in order to reactivate the economic system and create employment. To do this, the corporate governance of the company, together with the information contained in the financial statements, must generate sufficient confidence among funding providers so that funds flow towards the business sector.

For this purpose, changes have been introduced in accountancy and corporate governance regulations. With regard to corporate governance, different regulations have been designed which give precise indications on the composition of boards of directors, including specific characteristics of the board members. Elsewhere, the international bodies which publish accountancy standards (FASB and IASB) have drawn up a new conceptual framework for the preparation of financial statements in which prudence has been replaced by concepts such as "fair value".

Given this context, the aims of the project are structured around three main research issues, which will help to provide evidence on the adequacy of the regulatory changes implemented: 1) Fair value versus accounting conservatism: effects on investment and funding. In particular, the external shock introduced by corporate credit default swaps will enable us to analyse whether companies should use more conservative accountancy to access funding through debt; 2) Composition of the board of directors: we will analyse the effects of gender quotas (in force in Norway since 2008), and the desirable characteristics of board members in order to facilitate the board's supervisory role; and 3) we will study the role of foreign investors to supervise delegated board members and to improve the way part-owned companies operate. In particular, we will study the specificities of Japan and the countries of southern Europe.


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