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Financial reporting of Brazilian subsidiaries to Swedish multinational parent companies: a field study
Department of Business Administration, Åbo Akademi University, Turku, Finland.
Department of Business Administration, Åbo Akademi University, Turku, Finland.
Jönköping International Business School, Jönköping University, Sweden.
2009 (English)In: Journal for International Business and Entrepreneurship Development, ISSN 1549-9324, Vol. 4, no 3, 179-190 p.Article in journal (Refereed) Published
Abstract [en]

With significant foreign direct investment in emerging economies and the European Union requirement that publicly held multinationals present consolidated financial reports, vertical adjustments to information provided by subsidiaries to conform to parent company accounting standards have become important. Yet, this issue has not been investigated significantly. In this study, we explore Brazilian subsidiaries' adjustments for Swedish multinationals to comply with Swedish accounting standards for consolidated financial reports as typical of the issue of vertical adjustments in general. Results show that subsidiaries that are material in consolidated groups seemingly make appropriate adjustments. Other subsidiaries that are not material are inconsistent. Also, some subsidiaries often distort financial results by inappropriately making adjustments before translating to the functional currency. Most subsidiaries use adjustments to smooth income. Lack of guidance and tacit approval from the parent company are possible factors subsidiaries' to make appropriate vertical adjustments. Laxity in the external audit process is apparent.

Place, publisher, year, edition, pages
Inderscience Enterprises Limited , 2009. Vol. 4, no 3, 179-190 p.
Keyword [en]
consolidated financial reporting, group financial reporting, vertical adjustments, multinationals, multinational enterprises, MNEs, foreign subsidiaries, currency translation, income smoothing, accounting standards, Brazil, Sweden, external audit.
National Category
Economics and Business
Research subject
Business Studies
URN: urn:nbn:se:umu:diva-47620DOI: 10.1504/JIBED.2009.029011OAI: diva2:443532
Available from: 2011-09-26 Created: 2011-09-26 Last updated: 2012-08-21Bibliographically approved

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Hassel, Lars
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