Dr Julia Smith, Reader in the Department of Accounting and Finance, has been awarded £2,400 from the Carnegie Trust for the Universities of Scotland for a research project entitled "Applying the Stated Preference Approach to the Study of Financial Reports".
The fieldwork will be undertaken by Dr Smith's PhD student Miss Yu-Lin Hsu, who is being jointly supervised by Professor Gavin Reid of St Andrews University, a visiting professor in the department of Accounting & Finance. This project applies a stated preference approach (one based on surveys, rather than on market data) to explore companies' choice of financial reporting modes and to investigate their adoption costs and benefits.
It aims to provide, analyse, and interpret empirical evidence on companies' choice behaviour, and hence enhance the understanding of financial reporting choices. There are three major sections in this project: developing a new stated preference approach to the choice of financial reporting regime; estimating a novel two-stage model of choice of financial reporting regime and techniques for implementing them, using the UK data; and drawing out the contemporary policy implications for the UK of new financial reporting regimes (e.g. new UK GAAP). This research will take into account recent policy changes in the UK, and it will provide crucial policy insights which will benefit companies, investors, and standard-setters alike.