CONCEPTUAL AND PRACTICAL APPROACHES TO THE ASSESSMENT OF ACCOUNTING PRACTICES ACCOUNTING DOCTORAL SCHOOL DOCTORATE THESIS A+

CONCEPTUAL AND PRACTICAL APPROACHES TO THE ASSESSMENT OF ACCOUNTING PRACTICES ACCOUNTING DOCTORAL SCHOOL DOCTORATE THESIS CONTENTS INTRODUCTION 9 Motivation and the importance of research 10 The purpose and objectives of the research 11 Current state of knowledge 12 Research Methodology 14 CHAPTER 1. THEORETICAL APPROACHES OF VALUE AND EVALUATION 19 1.1. Discussions for development of accounting as a science 20 1.1.1. Early Periods 20 1.1.2. Modern Economy period 20 1.1.3. First Discussions 21 1.1.4. Effects of Economical Movements, Depressions 21 1.1.5. Bases of Theories 22 1.1.6. Assessment for theory foundation 23 1.1.7. Developing Accounting 24 1.2. Principle of theoretical Discussions 24 1.2.1. The Classical Period 24 1.2.2. The Neoclassical Period 26 1.2.3. Academical concepts 33 1.2.3.1. The measurement school concept 34 1.2.3.2. The informative school concept 34 1.3. Modern approaches to valuation in accounting 35 CHAPTER 2. NORMALIZATION, HARMONIZATION AND 42 CONVERGENCE OF ACCOUNTING EVALUATION 2.1. Historical Overview of the Development and Convergence of Accounting Standards 43 2.2. Recognition and Valuation in Accounting According to IAS / IFRS 51 2.3. Further Discussion of Valuation in IFRS 13 57 2.3.1. Fair value measurements for company assets 59 2.3.1.1. Basic Issues Related to Fair Value 59 2.3.1.2. Exploration of IFRS Issues 60 2.3.2. European Accounting Standards (EAS) on Valuation in Accounting 61 2.4. Settling of financial valuation in accounting 61 2.4.1. Evaluation of the IAS 36 disclosures 62 2.4.2. The determinative factors for the highest and lowest scores 62 2.4.3. Settlement between accounting and valuation 63 2.4.4. The meaning of high score meaning according with the Accuracy – Paris Dauphine Barometer? 63 2.4.5. Financial disclosures to be chosen according with IAS 36 64 2.4.6. Positives and negatives of Fair Value in accounting 64 2.5. Observing of Romania and Turkey for valuation perspective and IFRS adaption 65 2.5.1. Accounting policies and choices for valuation in Romania 66 2.5.2. Features of valuation in the accounting system of Turkey 69 2.5.3. IFRS adoption in Romania and in Turkey 70 CHAPTER 3. ACCOUNTING EVALUATION BETWEEN CERTAINTY OF 73 PAST COSTS AND UNCERTAINTY OF FUTURE VALUES AND MEASUREMENT IN ACCOUNTING 3.1. Theoretical discussions 73 3.1.1. The function of evaluation 74 3.1.2. The case for historic cost 75 3.2. The concept of value and valuation in financial accounting 78 3.2.1. The object of financial accounting valuation 79 3.2.2. Elements of Financial Accounting Valuation 83 3.2.3. The concepts of value, cost, and price in management accounting 86 3.2.3.1. The object of management accounting valuation 86 3.2.3.2. The elements of management accounting valuation 89 3.2.4. Accounting principles in valuation 93 3.2.5. Valuation bases for accounting; Historical cost and fair value 93 3.2.5.1. Valuation at historical cost 95 3.2.5.2. Valuation at fair value cost 96 3.2.5.2.1. The 3-Level Fair Value Processing Hierarchy 97 3.2.5.2.2. Why to use Fair Value? 98 3.2.5.2.3. Fair Value’s position in financial crisis 100 3.2.5.2.4. How Fair Value might push up the negatives 102 in a financial crisis? 3.2.5.2.5. Fair Value’s interaction effect 104 3.2.5.2.6. Investors’ opinion on use of evaluation methodologies 106 (summary of the event study) 3.2.5.2.7. Strengths and limitations of historical cost and fair 106 value cost models 3.2.6. Conclusion 106 3.3. Measurement in accounting 107 3.3.1. Importance of information in measurement 110 3.3.2. Modern-era subjects in measurement 115 3.3.2.1. Overview of accounting measurement 115 3.3.2.2. Problems with accounting measurement 116 3.3.2.3. Types of accounting measurement 117 3.3.2.4. Discussion of the types of accounting measurement 119 3.3.3. Evaluation for measurement of accounting 120 3.3.4. The conditions in measurement 124 3.3.4.1. Errors 126 3.3.4.2. Meaningfulness 127 3.3.4.3. Continuations 128 3.3.4.4. Psychological and physical theory 128 CHAPTER 4. EMPIRICAL STUDY ON THE IMPACT OF FAIR VALUE 130 EVALUATION 4.1. Methodology 130 4.2. Descriptive statistics of the study 132 4.3. Inferential statistics of the study: Fair value 148 4.4. Inferential statistics of the study: Country effects 165 CONCLUSIONS, CONTRIBUTIONS AND RESEARCH DIRECTIONS 175 Conclusion 175 Contributions 179 Limitations of the study 183 Dissemination of results 183 REFERENCES 184 List of the tables Table 1. Variables in Empirical study 16 Table 1.1. Two basic asset value scenarios 36 Table 2.1. Pre-2009 Inputs into U.S. GAAP 44 Table 2.2. Selected Differences between IFRS and GAAP 48 Table 2.3. Overview of IFRS 1 51 Table 2.4. Overview of IFRS 2 52 Table 2.5. Overview of IFRS 3 52 Table 2.6. Overview of IFRS 4 52 Table 2.7. Overview of IFRS 5 53 Table 2.8. Overview of IFRS 6 53 Table 2.9. Overview of IFRS 7 54 Table 2.10. Overview of IFRS 8 54 Table 2.11. Overview of IFRS 9 54 Table 2.12. Overview of IFRS 10 55 Table 2.13. Overview of IFRS 11 55 Table 2.14. Overview of IFRS 12 55 Table 2.15. Overview of IFRS 13 56 Table 3.1. Investors’ opinions on evaluation methodologies 106 Table 4.1. Variables in empirical study 130 Table 4.2. Country statistics 132 Table 4.3. Fair value statistics 134 Table 4.4. Cross-tabulations, fair value used by country 135 Table 4.5. Descriptive statistics, revenue 136 Table 4.6. Frequencies, revenue 137 Table 4.7. Descriptive statistics, profit margin 139 Table 4.8. Frequencies, profit margin 139 Table 4.9. Descriptive statistics, month-over-month share price increase 141 Table 4.10. Frequencies, month-over-month share price increase 141 Table 4.11. Descriptive statistics, year-over-year share price increase 143 Table 4.12. Frequencies, year-over-year share price increase 143 Table 4.13. Industry representation in the sample: Frequencies Industry 145 Table 4.14. Investor optimism: Frequencies Optimism 146 Table 4.15. Investor likelihood to buy: Frequencies likely to buy 147 Table 4.16. Investor evaluation of company transparency: Frequencies company 148 transparent Table 4.17. Independent samples T-Test, revenue and fair value use 149 Table 4.18. Independent samples T-Test, profit margin and fair value use 150 Table 4.19. Independent samples T-Test, month-over-month stock price growth, 151 and fair value use Table 4.20. Independent samples T-Test, year-over-year stock price growth, and fair 152 value use Table 4.21. Chi-Square analysis, fair value use industry fair value cross-tabulation 154 Table 4.22. Independent samples T-Test, investor optimism and fair value use 155 Table 4.23. Chi-Square analysis, fair value use optimism 157 Table 4.24. Independent samples T-Test, investor likelihood to buy more stock and 158 fair value use Table 4.25. Chi-Square analysis, fair value use * Investor likelihood to buy more stock 160 Likely to buy Table 4.26. Independent samples T-Test, investor evaluation of company transparency 162 and fair value use Table 4.27. Chi-Square analysis, fair value use * Investor evaluation of company 163 transparency Table 4.28. Independent samples T-Test, revenue and country 165 Table 4.29. Independent samples T-Test, profit margin and country 166 Table 4.30. Independent samples T-Test, month-over-month stock price growth 167 and country Table 4.31. Chi-Square analysis, country * month-to-month stock price growth 168 Table 4.32. Independent samples T-Test, year-over-year stock price growth, and country 170 Table 4.33. Independent samples T-Test, investor optimism and country 171 Table 4.34. Independent samples T-Test, investor likelihood to buy more stock 172 and country Table 4.35. Independent samples T-Test, investor evaluation of company transparency 173 and country List of the figures Figure 1.1. Scatter Plot, English Gross Capital Formation () 30 Figure 3.1. The open systems theory of organizations 86 Figure 3.2. The role of accounting in open systems 87 Figure 3.3. The controls-driven organization 88 Figure 3.4. Effective factors on financial statements 93 Figure 3.5. Price realization between sellers and buyers 97 Figure 3.6. Fair Value usage trend 100 Figure 3.7. Financial crisis’ steps on companies 102 Figure 4.1. Bar chart of country representation 133 Figure 4.2. Bar Chart of Fair Value Representation 134 Figure 4.3. Bar chart of fair value representation by country 135 Figure 4.4. Histogram of revenue distribution (normal curve superimposed) 138 Figure 4.5. Histogram of profit margin distribution (normal curve superimposed) 140 Figure 4.6. Histogram of Month-over-Month Share Price Increase Distribution (Normal 142 Curve Superimposed) Figure 4.7. Histogram of year-over-year share price increase distribution (normal curve 144 superimposed) Figure 4.8. Industry representation in the sample: Bar chart 145 Figure 4.9. Optimism representation in the sample: Bar chart 146 Figure 4.10. Likelihood to buy representation in the sample: Bar chart 147 Figure 4.11. Investor evaluation of transparency: Bar chart 148 Figure 4.12. Fair Value Use by Industry: Bar chart 155 Figure 4.13. Optimism by fair value: Bar chart 158 Figure 4.14. Likelihood to buy by fair value: Bar chart 161 Figure 4.15. Company transparency evaluation by fair value: Bar chart 164 Figure 4.16. Month-to-month stock price growth by country: Bar chart 169 INTRODUCTION The purposes of evaluating accounting systems can be condensed into the set of goals promoted by a particular evaluator. For example, according to the European Central Bank (2006), the purpose of evaluating accounting systems is to ensure that such systems ensure a high degree of financial stability. Goals can be large or small. Financial stability is a large goal, but the European Central Bank (2006) segmented it into ten smaller goals. The nature of goals will vary depending on the interests and philosophies of the evaluator. The European Central Bank (2006) takes a continent-wide and macroscopic approach. On the other hand, national governments might have smaller goals, such as ensuring that a particular accounting system accords with an existing set of national laws or practices (Epstein & Jermakowicz, 2008). Thus, it cannot be concluded that there is a commonality of purpose in evaluating accounting systems; the differing scope, character, and aims of the evaluator have been to be taken into account. Given the prevalence of IFRS, one of the more common purposes of accounting evaluation systems in recent times has been to offer feedback on the IFRS standard. This goal has prompted entities ranging from the European Central Bank (2012) to the large accounting firms to create position papers on evaluation. However, there is also a large body of national-level evaluations of accounting systems. Two of these systems, namely those associated with evaluation in Romania and Turkey, will be the empirical centerpiece of this study. The purpose of national-level evaluations is different from evaluations afforded by transnational accountancies and institutions. At the national level, governments, business consortia, and other key stakeholders are most concerned about issues of compliance and efficiency. They are not primarily concerned with bringing about changes in the letter of IFRS but rather in looking across internal, national, and international standards in a manner that will allow local goals to be realized. Such goals are often colored by a country’s geostrategic position and political circumstances. For example, Turkey is a rapidly-liberalizing and growing economy with increasing links to the world of global capital and no obligation to a particular international accounting standard, while Romania is part of the European Union (EU) and, therefore, obliged to live up to IFRS (Mankiw, 2011). As such, the purposes of evaluating accounting systems are very different in Romania and Turkey. Yet the same basic approach prevails; evaluation takes place from a starting-point in which goals are articulated and defined and then moves to a gap analysis in which the ability of current standards and practices to meet the goals is evaluated. References REFERENCE BOOKS 1. Aboody, D., Lev, B. The value relevance of intangibles: The case of software capitalization. Journal of Accounting Research, 36. 2. Adumitrăcesei, I.D., Post-socialist Romania Confronted With Underdevelopment, Niculescu, N.G. Editura Economică, Bucureşti, 2000 3. Albu,N.. Albu,C. Instrumente de management al performanţei. 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