Polityka bilansowa spółek akcyjnych – uwarunkowania skuteczności oraz skutki rozpoznania przez inwestorów
Accounting policy of joint stock companies – CONDITIONS of effectiveness and results of detection by investors

Summary/Abstract: The accounting standards provide companies, including joint-stock companies, with a significant amount of flexibility in their reporting practices. Accountants and financial managers have frequently been accused of misusing this flexibility in the hope of boosting earnings and stock prices. However, accounting choice should not affect stock price if two conditions hold. First, the market must be efficient at least in the semi strong form. In other words, stock prices must incorporate all relevant information about the issuer. This means that stock holders have read and examined financial data included in the additional information that contains notes to financial statements. Second, enough information must be provided in the annual report so that financial analysts can construct earnings under the alternative accounting methods. The issue of whether the above mentioned conditions are held is an empirical matter. A number of academic papers have addressed this issue. Most of them focused on the second condition (i.e. market efficiency). One of them (reviewed above) primarily have taken into account the first condition, and tried to evaluate whether financial statements prepared in accordance with the International Financial Reporting Standards should include information that is necessary to hold the first condition. The results suggest that there is a lot of flexibility in the International Financial Reporting Standards that can be used to influence investor’s opinion and therefore also stock prices. The reason is obvious. In many cases financial statements prepared according to the International Financial Reporting Standards do not include information that is necessary for holding the first condition.

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