Private company financial reporting: advancing the debate

In December, ICAEW held its annual Information for Better Markets Conference ‘Private company financial reporting’. The theme for this year’s conference was chosen to reflect the importance of private companies to the global economy and a renewed interest in small and medium-sized entity reporting following the introduction of IFRS for SMEs. In its 12th year, the conference continues to attract a broad audience of academics and non-academics, interested in the research commissioned by ICAEW specifically for the event.

Innovative research

Reflecting on the success of this year’s conference, one of the most notable themes was the use of innovative research techniques. With an abundance of publicly available information for listed companies and comparatively less on private companies, a real challenge was faced in finding information on which to base the research. The academics rose to the challenge, utilising existing research techniques and adapting them to a different environment in ambitious and creative ways.

Ambition was certainly shown in the research conducted on different approaches to private company financial reporting regulation. To gather the required data, Michael Minnis of University of Chicago Booth School of Business and Nemit Shroff of Massachusetts Institute of Technology, surveyed standard setters and companies in 21 and 33 countries respectively, sending over 500,000 emails across a six month period. In addition to the impressive scope of the project, much consideration had also been given to the design of the survey, balancing the need for detail to capture the data required, while being concise enough to encourage participation and increase the response rate. The survey generated some very interesting results, for example, while the majority of companies surveyed agreed with public disclosure requirements, few of them would or do disclose, when given a choice. This research not only offers new insights into private company financial reporting but has also created of a new data set on which future research can be built.

Joachim Gassen, Humboldt University, Berlin, gathered the opinions of a much smaller group by conducting 23 interviews. However this research was no less ambitious or impressive. The purpose of the interviews was to capture a true insight into the use of the IFRS for SMEs, by questioning leading accounting experts across multiple jurisdictions. The results were presented creatively, using quotations from the experts to interpret existing data on private company financial reporting and therefore explain the reasons for adoption or non-adoption of the IFRS for SMEs in different countries.

Ole-Kristian Hope and Dushyant Vyas from Rotman School of Management, University of Toronto, also produced some informative work on the role of financial reporting in private company finance. Acknowledging the diversity of private companies, they explored the role of financial reporting in a variety of private company financing structures ranging from family and government ownership to the use of trade credit and crowdfunding. The conclusion they reached is that financing structures are the principal driver of financial reporting for private companies.

ICAEW believe that through its relationship with these academics and the innovative methods, demonstrated by all commissioned researchers, new research techniques have been identified that will inform future research on private company financial reporting.


While one of the purposes of the conference is to advance academic research, the other purpose is to create an environment in which debate is encouraged between the academics and non-academics. ICAEW facilitate these , often lively, debates by ensuring each session is interactive, as well as providing lots of networking opportunities across the two days.

This year was no exception, with interesting responses, from experienced practitioners, to the academic research presented; in addition to plenty of thought provoking questions when the debate was opened up to the audience. One of the key themes that emerged during these sessions was the issue with trying to create a ‘one size fits all’ approach to private company financial reporting, given the diversity of companies within this category. There was also some discussion about a company’s obligations to society, particularly with regard to tax contributions, and the role of financial reporting in meeting these obligations. It is through debates such as these, and ICAEW’s thought leadership programmes, that we aim to obtain a better understanding of the role of accounting in society, and use it to influence policy makers, so that policy making is more soundly based.

For more information

If you would like to learn more about this year’s IFBM conference, the planned conference for 2017 or the Information for Better Markets programme in general, please visit The 2016 conference was filmed and videos of each academic speaker and practitioner response are available here.