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Title: Determinants of the classification of the share of profit or loss of equity investments
Authors: Lourenço, I.
Fernandes, S.
Branco, M. C.
Curto, J. D.
Keywords: Accounting choices
Income statement
Operating income
Equity method
Issue Date: 2018
Publisher: Asociación Española de Contabilidad y Administración de Empresas
Abstract: This paper examines the determinants of European Union companies’ classification choices of profit or loss of associates and joint ventures accounted for using the equity method within or outside the operating income. Based on a sample of 242 firms from 20 European countries that apply IFRS, we found that firms from Anglo-Saxon and Nordic countries are significantly more likely to choose to classify this share of profit or loss as operating income than their counterparts. In addition, we found that companies presenting a positive amount in the line item pertaining to the share of the profit or loss, companies with higher leverage, with higher annual change in revenues and companies audited by Big 4 audit firms are more likely to classify the share of profit or loss as operating income.
Peer reviewed: yes
Appears in Collections:BRU-CRI - Comunicações a conferências internacionais

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