The Usefulness of Compulsory Financial Reporting for Management Decisions: an Analysis of Spanish Small and Medium Sized Businesses
José M. Moneva Abadía
Beatriz Cuéllar Femández
The aim of this paper is to provide empirical evidence as to the degree of usefulness of the annual accounts that Spanish small businesses are required to produce. Given that bankers and managers are the main users of these financial statements, we have focused our study on the management decision making process and on the burdens of this legal requirement. Thus, using a questionnaire forwarded to the directors of one hundred of the most relevant small and medium sized businesses in Spain, we have obtained the following basic results: - The compulsory annual accounts required by Spanish law are relevant for the management decisionmaking process, although directors think that they are of greater value to other users, such as banks and financial creditors. - Although the elaboration of annual accounts is a large burden for Spanish small and medium sized businesses, there are other administrative requirements, such as the completion of tax forms, that are considered even more onerous. - There are significant differences of opinion between UK and Italian management, as compared to their Spanish equivalents, on the costs and usefulness of financial reporting.
accounting standards overload, small business' financial reporting, usefulness for manage¬ment decisions, abbreviated accounts.
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