Accounting information and investment properties:

Transcript:Accounting information and investment properties::
Accounting information and investment properties: economic and financial stakes for listed groups Aurélien DECAMPS KEDGE Business School aurelien.decamps@kedgebs.com Stéphane OUVRARD KEDGE Business School stephane.ouvrard@kedgebs.com Research Question Does accounting choice for corporate investment property have an impact on economic and financial disclosures for listed companies ? Aim Understand accounting choice of listed companies concerning their investment property Estimate the impact of this choice on their consolidated financial statement Presentation Background Investment property in a corporate context Accounting choice for investment property Empirical study Investment property of listed groups (SBF 120) Method Results Conclusion Background Investment property in a corporate context Financialization of corporate property in the french context Value creation from corporate property (Nappi-Choulet et al., 2009) Outsourcing / sale and leaseback: core business and debt reduction strategies from firms Fast development of french REITs (SIIC since 2002) Financial approach and asset management applied to corporate property (Simon, Malle, 2009) Background Investment property in a corporate context IFRS Standards (January 1st 2005) Owner-occupied property (IAS 16) vs. Investment Property (IAS 40) Measurement at the Fair Value: financial approach based on actuarial assumptions Background Investment property in a corporate context Investment Property according to IAS 40: "Property (land or a building or part of a building or both) held (by the owner or by the lessee under a finance lease) to earn rentals or for capital appreciation or both" Fair Value according to IAS 40: “The amount for which the property could be exchanged between knowledgeable, willing parties in an arm's length transaction" Background Accounting choice for investment property Historical Cost  Referring to accumulated depreciation Fair Value Mark to Market referring to market value Mark to Model referring to appraisal methods such as capitalization rate or discounted cash flow IAS 40 : Choice between two accounting methods Background Accounting choice for investment property Background Accounting choice for investment property Pros & Cons of Fair Value Give a further information to reduce agency costs. Protect against the excess of Creative Accounting (Casta and Colasse, 2001). Step closer Accounting and Corporate Finance. Source of volatility and of short-term vision (Bloomfield, Nelson, Smith, 2006). Procyclical phenomenon amplifying the changes in the assets/liabilities values at the same pace as the economic cycle (Escaffre, Foulquier, Touron, 2008). Procyclical and self-fulfilling feature of fair value (Morand and Marteau, 2010). Pros Cons Two opposed models (historical cost / fair value) that raise the question of relevance vs reliability