Empirical Evidence - the Evolution of Consolidated Financial Reportin Essay

Empirical Evidence - the Evolution of Consolidated Financial Reporting Can Be Explained By Contracting Cost Variables - Essay ExampleAt the extreme, some researchers gravel titled their studies as examining the determinants of economic choices (Hagerman and Zmrjewski, 1979 Lekme and Page, 1992 Aitken and Loftus 1994 Whittred and Zimmer, 1994)Studies carried out by Whittred n 1987 have in fact mistook to analyze the set of amended rules of the Sydney Stock Exchange which was evidently an optional norm. However regulatory requirements regulatory requirements since 1921 have progressively promote the presentation of the consolidated statements. A meagre number of companies have voluntarily presented consolidated statements of their own under the regulatory influence.Statutory requirements were found influential than leaning rules of the stock exchange leading a vital role in disseminating knowledge about the techniques of consolidated statements through a seminar, professional literat ure and macrocosm examinations.Whitteds study further highlights the speculative assumptions of data where high levels of debt were assumed to mean there had been incidents of contractual arrangements between lenders and beneficiaries as minimum agency cost. The study albeit failed to rationalise the use of consolidated statements based on cost variations.Many of the practitioners were not familiar with the techniques of consolidations even when the Institute of Chartered Accounts and the Australian Society of Accountants made their counterbalance pronouncements on the subject of consolidation in 1946 and 1956 respectively. The accounting literature hereafter included more discussions about the virtues of consolidated statements as a means of make-up to a range of stakeholders. Nevertheless, changes in regulations were associated with the changes in practices in accounting education. This hypothesis yields an evidence of a mere causal relationship between accounting writers and its regulatory practices.Doubtlessly consolidation evolved in the demand of necessity for monitoring performance in compliance with the contracts between the firms and their suppliers of debt and equity capital aimed at reducing agency cost.The device characteristic difference of early consolidators with more subsidiaries than non-consolidators disappeared in 1950 amounting the introduction of taxation incentives. Institutional requirements were ruled out by the sample selection criteria promoting the growth of keeping company form and thus it gradually established the necessities towards the descending towards the extent of political cost. G. Whittred gives us a solid ground of its existence as followAccording to Clifford W Smith as described in the Incentives for Unconsolidated Financial Reporting says We provide a positive analysis of Firms decision to report the operations of a financial subsidiary on a consolidated versus unconsolidated basis.