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Lourenço, I. & Curto, J. (2010). Determinants of the accounting choice between alternative reporting methods for interests in jointly controlled entities. European Accounting Review. 19 (4), 739-773

I. M. Lourenço and J. J. Curto,  "Determinants of the accounting choice between alternative reporting methods for interests in jointly controlled entities", in European Accounting Review, vol. 19, no. 4, pp. 739-773, 2010

@article{lourenço2010_1732200940293,
	author = "Lourenço, I. and Curto, J.",
	title = "Determinants of the accounting choice between alternative reporting methods for interests in jointly controlled entities",
	journal = "European Accounting Review",
	year = "2010",
	volume = "19",
	number = "4",
	doi = "10.1080/09638181003687844",
	pages = "739-773",
	url = ""
}

TY  - JOUR
TI  - Determinants of the accounting choice between alternative reporting methods for interests in jointly controlled entities
T2  - European Accounting Review
VL  - 19
IS  - 4
AU  - Lourenço, I.
AU  - Curto, J.
PY  - 2010
SP  - 739-773
SN  - 0963-8180
DO  - 10.1080/09638181003687844
AB  - This paper examines whether the type of jointly controlled entity influences the management choice to report interests in this kind of joint venture using the equity method or proportionate consolidation. We address this gap in the accounting choice literature by exploiting the UK setting where, due to the transition to IFRS, firms had to change their reporting method for interests in jointly controlled entities from the gross equity method to a similar approach (equity method) or to proportionate consolidation. We support our analysis on the classification of jointly controlled entities proposed by Hennart (1988). We hypothesize that venturers are more likely to change their reporting method to proportionate consolidation when the majority of their jointly controlled entities are cases of Link instead of Scale cooperation. After controlling for several variables, our results are consistent with the predictions and thus suggest that the type of jointly controlled entity plays an important role in the management decision to report interests in jointly controlled entities using the equity method or proportionate consolidation. However, the results also provide empirical evidence supporting the importance of debt covenant costs and monitoring costs in the choice between alternative reporting methods.
ER  -