jurnal IAS

Munich Personal RePEc Archive Munich RePEc Personal Archive
What Is International Accounting International Accounting
Standards (IAS) bring about to the Standards (IAS) brings to
financial statements of Greek Listed Listed financial statements Greek
Companies? Company? The case of the Athens case of Athens
Stock Exchange

Online at http://mpra.ub.uni-muenchen.de/13207/ Online at http://mpra.ub.uni-muenchen.de/13207/
MPRA Paper no. 13207th, posted 06. MPRA Paper No. 13207, posted 06. February 2009 / 08:58 February 2009 / 08:58


What International Accounting Standards (IAS) bring about to the International Accounting Standards Are (IAS) brings to
financial statements of Greek Listed Companies? financial statements Greek Listed Companies? The case of the Athens Stock Case of Athens Stock
Exchange Exchange


Abstract
The aim of the present study is to investigate the repercussions of the accounting changeover from the purpose of this study is to investigate the impact of the accounting changeover from the
Greek Accounting Standards (GAS) to the International Accounting Standards (IAS) in relation to the Greek Accounting Standards (GAS) to the International Accounting Standards (IAS) in relation to the
published financial statements of Greek listed companies for the year 2004. published financial statements of companies registered in Greece for 2004. The results show that tangible results indicate that the real
assets, fixed assets, and total liabilities record significantly higher prices under the IAS. assets, fixed assets and total liabilities record prices significantly higher under IAS. Furthermore, it was more than that,
recorded that, in opposition to the net income after taxes, the book value appears to play a more significant note that, in opposition to net income after tax, book value seems to play a more important
role under the IAS, compared to that under the GAS. role in the IAS, compared with under GAS. There is also evidence that the adjustments of GAS to There is also evidence that the adjustments for GAS
improve net income of incremental value relevance, while the adjustments of GAS to book value net income do not increase the incremental value relevance, while the GAS to book value adjustments are not
improve it. improve.

Keywords: International Accounting Standards (IAS), Greek Accounting Standards (GAS), Value key: International Accounting Standards (IAS), Greek Accounting Standards (GAS), Value
relevance, incremental value relevance, Accounting Standards, Fair value relevance, the relevance of incremental value, Accounting Standards, Fair value

1.Introduction
Within the context of developments taking place in the world economy in recent years in the context of developments in the world economy in recent years
and due to the occurrence of series of corporate scandals (eg Enron, Parmalat), and due to the series of corporate scandals (eg Enron, Parmalat), which
Decided European Union, on the 31 European Union decided, on 31
st st
of December 2001, that all listed companies in December 2001, that all listed companies in
organized European capital markets must prepare their consolidated balance sheets in an organized European capital markets must prepare their consolidated balance sheets
accordance with the International Accounting Standards. in accordance with International Accounting Standards. At the same time, the European At the same time, the European
The Union allowed their voluntary application of the remaining non-listed companies and the Union allowed their voluntary application of the remaining non-listed companies and the
permitted the member-countries to extend their application. allow member countries to expand their applications. Thus, from the 1 Thus, from the 1 st
of January, January,
2005, The Overwhelming majority of EU member-countries, including Greece, have 2005, the majority of member states of the European Union, including Greece, have
confronted the application of two accounting systems, one for listed and the other for facing the implementation of two accounting systems, one for listed and the other for
non-listed companies. non-listed companies. For the handling of the matter, Greece currently considers the order to address the problems, Greece currently considering
The progressive establishment of the compulsory application of the IAS to the formation of non-listed mandatory application of IAS progressive to non-registered
companies. company.
The aim of the present analysis is to track the effects of the accounting standards The purpose of this analysis is to track the effects of the accounting standards
changeover from the previously applied Greek Accounting Standards to the International changeover from the previously adopted the International Accounting Standards Greek
JEL Classification: M41 - Accounting JEL Classification: M41 - Accounting
once, in the published financial statements of Greek companies. once, in the published financial statements Greek companies. Thus in Greece, where So in Greece, where
the French-Germany model (stakeholder oriented accounting system) was applied, the Franco-German model (system of stakeholder-oriented accounting) has been applied,
important effects from the application of new accounting standards are expected. important effect of the implementation of new accounting standards are expected. This is This
because the IAS, influenced by the shareholder-oriented accounting system, the target on the due IAS, affected by the accounting system oriented shareholders, the target on
improvement of investor protection. increase investor protection.
In the case of Greek companies, we collected data from their published financial In the case of Greek companies, we collected data from published financial
statements for the years 2004 and 2005 (which we took from the Athens Stock Exchange statement for the year 2004 and 2005 (which we took from the Athens Stock Exchange
and the Greek Capital Market Commission) regarding both accounting systems (GAS and and the Greek Capital Market Commission) regarding accounting systems (GAS and
IAS). IAS). In order to track the consequences of Involving the application of the IAS to the In order to track the consequences of which involves the application of IAS to
financial statements of Greek companies, our analysis focused on two points. Greek company's financial statements, our analysis focuses on two things. Initially, we Initially, we
investigated the influence of certain accounting and financial indicators magnitudes investigate the influence of certain accounting and financial indicators scale
through the use of descriptive statistics. through the use of descriptive statistics. We also investigated the value relevance (both We also investigated the value relevance (both
relative and incremental) of the book value and net income in relation to the IAS and the relative and incremental) of book value and net income in relation to the IAS and
GAS. GAS.
The results of the descriptive statistical analysis appear to support the argument that the descriptive statistical analysis appear to support the argument that the
The GAS are more conservative, while the IAS are characterized by the principle of "fair that GAS is more conservative, while the IAS are characterized by the principle of" fair
value ". value ". More specifically, it was found that the tangible assets, the fixed assets, and the More specifically, it was found that intangible assets, fixed assets, and the
Total liabilities under the IAS recorded significantly higher values in comparison with the total liabilities under IAS recorded significantly higher values compared with the
GAS. GAS. Simultaneously, the examination of the standard deviation shows that the introduction Simultaneously, the standard deviation of the examination showed that the introduction of
of the IAS appears to increase the Variability of the majority of balance sheet measures of the IAS appears to increase the variability of the majority of balance sheet measures
(ie fixed assets, total assets, total liabilities, and book value). (ie fixed assets, total assets, total liabilities, and net book value). Finally, the new standards Finally, the new standards
also appear to influence certain popular indicators of financial analysis, such as Asset Management also appears to affect certain popular indicators of financial analysis, such as Asset
Turnover (ATO) and leverage (Lev). Turnover (ATO) and leverage (Lev).
For the purpose of Investigating the influence of the IAS in the Correlations of book For the purpose of investigating the influence of IAS in this correlation
the value and net income with the share prices (ie value relevance), we Examined both the value and net income by the stock price (ie value relevance), we examined whether
relative and incremental value relevance. relative and incremental value relevance. However, in order to obtain more accurate, however, in order to obtain more accurate
results and therefore make safer conclusions, we correct multicollinearity by applying the results and therefore make safer conclusions, we correct multicollinearity by applying the
innovative methodology of Ridge regression in the examination of value relevance. Ridge regression innovative methodology in examining the relevance value. In the
coding the results, it appears that the IAS, in opposition to the GAS, give particular coding results, it appears that the IAS, contrary to the GAS, give special
weight to the balance sheet and to fair values. weight and balance sheet at fair value. More importantly, the results of relative More importantly, the results of the relative
value relevance did not record, in the case of the IAS, improvement of relative value relevance of the value is not recorded, in the case of IAS, increasing the relative value
relevance regarding the book value and net income (separate or in combination). about the relevance of book value and net income (separately or in combination).
However, in a model that included the book value along with net income it was found, however, in a model that includes the book value together with the net profit was found
that the book value, in contrast to net income, is more significant under the principles and that the value of the book, in contrast to net income, is more significant under the principles and
the rules of IAS. IAS rules. Finally, the results in incremental value relevance that the last recorded, the results in incremental value relevance to note that
adjustments of the GAS to net income (net income of GAS minus net income of IAS) GAS adjustment of net income (net income minus net income GAS IAS)
significantly improve the value relevance, whereas the adjustments of the GAS to book significantly improve the value relevance, while the adjustments of GAS to book
value (book value of GAS minus the book value of IAS) surely do not improve it. value (book value book value minus GAS IAS) would not fix it.
The present study touches upon a line of questions that have continuously Occupied the present study the question touched the line constantly occupied
international bibliography. international bibliography. In particular, this study examines how stakeholders oriented Specifically, this study examines how stakeholder-oriented
countries are influenced by the new accounting standards and compares indirectly the countries affected by the new accounting standards and indirectly comparing the
accounting systems of stakeholder and shareholder oriented countries. accounting system stakeholders and shareholder-oriented country.
The remainder of this study is organized as follows: Part Two provides a detailed Time of this study is organized as follows: Part Two provides a detailed
description of the bibliography with regard to the IAS. bibliographic description with regard to IAS. The data and the sample data and sample
companies that were used are presented in Part Three. companies used are presented in Part Three. Part Four Part Four analyzes the analyzing
methodology that was applied. methodologies. The results of the study are shown in Part Five. The results of this study is shown in Section Five. Finally, Finally
The conclusions and any possible further analyzes are recorded in Part Six and Seven conclusions and possible further analysis are recorded in Part Six and Seven
respectively. respectively.

2. Literature review
The importance of the question regarding the adoption and application of IAS is importance of questions about the adoption and application of IAS is
undoubtedly enormous, as is the spectrum of subjects to which it is related. clearly large, as the spectrum of related subjects.
Consequently, the IAS has been the subject of numerous studies in world markets. As a result, IAS has been the subject of much research in the world market.
Even though the application of IAS was rendered compulsory from 2005, many Although the application of IAS was rendered mandatory from the year 2005, many
companies all over the world found it worthwhile to begin their application willingly companies around the world would find useful to start the application
earlier. previously. On account of this event, plenty of studies took place in order to find out what the On account of these events, many studies carried out in order to find out what
characteristics of these companies are and Consequently, to discover the possible characteristics of these companies and consequently, to find possible
advantages in applying IAS. advantage in applying IAS. In the studies of Al-Basteki (1995), Murphy (1999), Tarca In the study of AL-Basteki (1995), Murphy (1999), Tarca
(2002) and El-Gazzar, Finn and Jacob (1999), it was made evident that companies which (2002) and El-Gazzar, Finn and Jacob (1999), it became clear that companies that
voluntarily apply the IAS have as a common denominator in the many foreign listings on a voluntary basis has applied IAS as a common denominator in the many foreign listings
stock markets and the internationalization of their sales. the stock market and the internationalization of their sales.
Concurrently, a large volume of studies (Garrido, Leon and Zorio (2002), Fontes, Simultaneously, a large volume of studies (Garrido, Leon and Zorio (2002), Photo,
Rodrigues and Craig (2005), Street, Gray and Brayant (1999), Murphy (2000), Rahman, Rodrigues and Craig (2005), Street, Gray and Brayant (1999), Murphy (2000), Rahman,
Perera and Ganesi (2002), Street and Gray (2002) and Larson and Street (2004)) Perera and Ganesi (2002), Street and Gray (2002) and Larson and Street (2004))
investigated the Harmonization of national (ie domestic) accounting standards harmonization with the investigating national (ie domestic) accounting standards
international accounting standards. international accounting standards. According to the international bibliography, the international bibliography According to that
notion of Harmonization has two Meanings. understanding of harmonization has two meanings. In particular, the formal Harmonization Specifically, harmonization of the formal
related to Harmonization at the level of laws and regulations, is separate from the related to the harmonization at the level of laws and regulations, apart from
Harmonization of material, which is related to a Harmonization at the procedural level of harmonization of material, which is related to the harmonization of procedural level
applied by the companies. implemented by the company. Some of the studies related to the formal Harmonization Several studies related to the formal harmonization
include that of Garrido, Leon and Zorio (2002) and Fontes, Rodrigues and Craig (2005). including that of Garrido, Leon and Zorio (2002) and Fontes, Rodrigues and Craig (2005).
Studies that report on the subject of the material Harmonization include that of Street, Gray's study report on harmonization issues of material including that of the Street, Gray
and Brayant (1999), Murphy (2000), Rahman, Perera and Ganesi (2002), Street and Gray and Brayant (1999), Murphy (2000), Rahman, Perera and Ganesi (2002), Street and Gray
(2002), and Larson and Street (2004). (2002), and Larson and Street (2004).
Another sector which appears to be related to the IAS is the subject of other creative sectors are apparently related to the IAS is the subject of creative
accounting or earnings management and how much this is limited depending on the accounting or management, and how much revenue is limited depending on the
accounting standards that are applied. applicable accounting standards. In analytical terms, Zimmermann and Gontcharov In analytical terms, Zimmermann and Gontcharov
(2003) showed that the Germany companies resort to the equal manipulation of their (2003) showed that German firms resort to manipulation as they
profits, with both the Germany standards and the International Accounting Standards. advantage, with both standard German and International Accounting Standards.
Conversely, the Germany companies that apply the American accounting standards (U.S. Conversely, German companies applying U.S. accounting standards (U.S.
GAAP) present more precise, hence of higher quality profits. GAAP) present more precise, the high quality benefits. In contrast with the analysis of contrast with the analysis of
of Zimmermann and Gontcharov (2003), the analysis of Barth, Landsman and Lang from Zimmermann and Gontcharov (2003), the analysis of Barth, and Lang landsman
(2005), which supported the examination of samples coming from various companies (2005), which supports the sample inspection companies that come from different
countries, led to the conclusion that the companies manipulate their profits when the state less, resulting in the conclusion that the companies manipulate their profits less if
IAS are applied. IAS is applied.
One of the more common questions within the international bibliography, if not the One of the more common questions in the international bibliography, if not the
most popular, that has Occupied financial accounting is the investigation of the most popular, which has occupied the financial accounting is the investigation of
Correlations of accounting information (ie Earnings, book values, cash flows, etc..) correlation with accounting information (ie earnings, book value, cash flow, etc.) with
share prices and returns (value relevance). stock prices and returns (value relevance). A catapult for further studies was made a shot for further study are made
possible by the research of Ball and Brown (1968), via the investigation of the correlation studies made possible by Ball and Brown (1968), through investigation of the correlation
of earnings with share returns which led to the conclusion that share prices re about them with income shares that resulted in the conclusion that stock prices react
Positively to the accounting information that is included in published financial positive for the accounting information that is included in published financial
statements. statement. The main goal of a number of studies that came to fruition in the last few primary goal of a number of studies that came to fruition in a few
years was to examine whether the correlation between the accounting information and the year was to examine whether the correlation between the accounting information and the
share prices differentiates depending on the accounting standards applied. distinguish between the stock price depends on the applicable accounting standards. The need for requirements
the conduct of such studies became even stronger from the moment that the IAS were the implementation of the study became more powerful than when the IAS was
presented. presented. This generated a rich bibliography that focused on this question. This produces a rich bibliography that focuses on this question.
Numerous studies (Sami and Zhou - 2004, Lin and Chen - 2005, etc.) Numerous studies have become (Sami and Zhou - 2004, Lin and Chen - 2005, etc.) has become
present in order to compare the International Accounting Standards with the Chinese there to compare the International Accounting Standards with the Chinese
Accounting Standards (CAS). Accounting Standards (CAS). The existence of a large number of such studies is related existence of a large number of such studies related to
to the fact that in China, two organized money and capital markets function, where one is the fact that in China, the two organized money and capital markets function, where one is
Exclusively Concerned with domestic investors and the other with foreign investors. concerned exclusively with domestic investors and others with foreign investors. Any Any
companies that issue shares in the domestic market must prepare their financial companies that issue shares in the domestic market must prepare their financial
statements under the Chinese Accounting Standards (CAS), while those companies that claim under Chinese Accounting Standards (CAS), while the companies that
issue shares in the second market must prepare their financial statements under the rules issue shares in both markets must prepare their financial statements under the rules
and principles of the International Standards. and the principles of International Standards. Furthermore, any companies that issue further, each company that issued
shares in both markets must prepare their financial statements published under CAS as shares in both markets must prepare financial statements published under CAS as
well as IAS. well as the IAS. This characteristic has made the Chinese Stock Exchange market the center of this characteristic has made the Chinese Stock Exchange market was
of the study in question, as this market provides a unique comparative advantage with the study in question, as this market provides a unique comparative advantage with the
Comparing directly purpose of the IAS to domestic accounting standards (CAS) over the purpose IAS directly compare domestic accounting standards (CAS) over
longer periods of time and not only, as has been the case with plenty of countries in the long enough and not merely, as has happened with many countries in
European Union, in the changeover year from one system to the other (ie 2005). European Union, in the year of transition from one system to another (ie 2005). A study study
such as this one was realized by Sami and Zhou (2004) in a sample of Eighty-one such as this one recognized by the Sami and Zhou (2004) in a sample of eighty-one
companies, which issued shares in both markets for the period of 1994 to 2000. company, which was issued in both the stock market for the period 1994 to 2000. The It
results showed that the accounting information is related to the share prices under both results indicate that accounting information relating to the share price below the
accounting systems; however the cross-correlation in question is larger under the IAS. accounting system, but the cross-correlation in question is larger under IAS.
Another study regarding the Chinese Stock Exchange market is that of Lin and Chen, another study on the Chinese Stock market is that Lin and Chen
(2005), where using a different methodology from Sami and Zhou (2004) led to the (2005), where using a different methodology from Sami and Zhou (2004) led to the
opposite conclusion; namely, that the accounting information governed by the principles of the opposite conclusion, that the accounting information is governed by the principles of
of the CAS has larger cross-correlation with the share prices and share returns in the CAS has a cross-correlation with the greater share prices and share back in
comparison to that of the IAS. compared with that of IAS.
However, the international bibliography did not only focus on the Chinese market but, however, the international bibliography not only focus on the Chinese market but
on the Germany market as well, Comparing the Germany Accounting Standards (Germany in the German market as well, comparing the German Accounting Standard (German
USA) to the international standards. USA) to international standards. The study of Hung and Subramanyam (2004), in a study of Hung and Subramanyam (2004), in a
Eighty samples of companies that voluntarily applied the IAS, Exclusively eighty compared the sample firms that voluntarily apply IAS, exclusive compare
IAS Germany with the Accounting Standards in the year of accounting changeover from IAS with German Accounting Standards in the year of the changeover of accounting
The Germany Accounting Standards to the IAS. German accounting standards to IAS. The results of the above analysis showed results of the above analysis shows
amongst other things that the book value of equity under the IAS in relation to the among other things that the book value of equity under the IAS in relation to the
German accounting standards and in opposition to the net income is related more to share and German accounting standards conflict with the net income is more related to share
prices. prices.
Furthermore, studies such as that of Harris and Muller (1999) have dealt with the addition, studies like that of Harris and Muller (1999) have dealt with the
comparison of the IAS to the American Accounting Standards (U.S. GAAP). comparison of the Accounting Standard IAS to U.S. (U.S. GAAP). According to According to
The Securities and Exchange Commission of the United States America (SEC), all foreign Securities and Exchange Commission of the United States of America (SEC), all foreign
companies that hope to be listed in American stock markets, must reconcile their hopes for the companies listed on U.S. stock markets must reconcile
accounting - financial statements in accordance with the principles and rules that govern accounting - financial statements in accordance with the principles and rules that govern
the American Accounting Standards (U.S. GAAP). U.S. Accounting Standards (U.S. GAAP). This has however raised reconciliation reconciliation But this has led to
Objections serious, as in the majority of cases it functions as a constraint for many serious objections, as in most cases serves as a constraint for many
companies trying to be listed in American stock markets, for it can cause serious financial companies trying to market listed on U.S. stock, as it can cause serious financial
losses to these companies. losses of these companies. Since the IAS is similar, however with certain differences, similar to Because IAS, but with certain differences, for
the U.S. GAAP in comparison to any other accounting standards, these became Objections U.S. GAAP compared to other accounting standards, this objection to be
even greater in the light of new standards accounting. even greater in light of new accounting standards. In these frameworks, all of the Within this framework, all
former events function as a Motivating factors in the context of Harris and Muller (1999) event served as a former driver in the context of Harris and Muller (1999)
in order to compare the IAS with the U.S. GAAP. in order to compare IAS with U.S. GAAP. Specifically in their study they used a special in their study they used
sample of thirty-one non-American companies that had their primary financial statements and samples of thirty-one non-American companies that have their primary financial statements
under the IAS, and they reconcile them under the U.S. GAAP in order to participate in the IAS, and they reconcile them under the U.S. GAAP in order to participate in the
American stock markets. U.S. stock market. For their methodology, Harris and Muller (1999) used price of their methodology, Harris and Muller (1999) used price
models, return models, and market value models. model, the model again, and the market value of the model. Regardless of the fact that the results Apart from the fact that the results
were not homogeneous for the three Examined models, the general finding of their review is not homogeneous for the three models, generally finding them
analysis was that the accounting magnitudes (ie net income) reconciled to the American analysis is that the amount of accounting (ie net income) reconciled with the United
Accounting Standards (U.S. GAAP), have greater value relevance in comparison to that of Standard Accounting (U.S. GAAP), has a relevance value greater than the
the IAS. the IAS.
Finally, Barth, et al (2005), expanded the above analysis by Comparing IAS to the end, Barth, et al (2005), extending the above analysis by comparing IAS to
domestic accounting standards for more than one country. domestic accounting standards to more than one country. They specifically Examined They specifically examined
how much the IAS improved the quality of accounting information amongst a large how much IAS improve the quality of accounting information between a large
sample of companies from twenty-three different countries (for the 1994 to 2003 period). sample companies from twenty-three different countries (for the period 1994-2003).
The results showed that the magnitudes Examined accounting (book value and net results showed that the accounting review quantities (and the net book value
income) under the IAS have greater Correlations with the share prices and returns. income) under IAS has a greater correlation with stock price and return. These This
results however require particular attention as, in contrast to other studies, they are not, but the results require special attention, in contrast to other studies, they are not
Exclusively focused on one country. focusing only on one country. Therefore, we can draw more valid Relatively Therefore, we can draw relatively more valid
conclusions about the general effect of IAS rather than the country effects per se. conclusions about the general effects than the effects of IAS per se.
Moreover, the main disadvantage of studies that involve companies from various addition, the major weakness of research involving companies from various
countries is that it is difficult to check the specific characteristics of each country is a country that is difficult to check the specific characteristics of each country
separately and henceforth comparability of data is not secured. separately and then comparability of data is not guaranteed.
 3. Sample and data
The sample used in the present study is composed of companies in which shares are samples that are used in this study consisted of companies in which shares
listed in the Athens Stock Exchange and where the period is Concerned involves listed on the Athens Stock Exchange and in which the period involving
administrative years of 2004 and 2005. administration in 2004 and 2005. There were over one hundred companies included There are more than a hundred companies, including
in the initial sample and with all sample companies, the administrative year finished on the initial sample and samples with every company, in administratively complete on
The 31 31 st of December of the year in question. December that year. Among the sample companies, there was no Among the sample companies, there was no
company with over a twelve-month period of use. companies with more than twelve months of use. From the final sample however, the end of the sample, however,
financial, insurance and investment companies were excluded in compliance to previous finance, insurance and investment company previously issued in accordance
studies bibliography within the international. studies in the international bibliography. The reason for omitting these companies is reason to eliminate these companies are
related to the fact that they follow different accounting practices and rules in their relation with the fact that they follow the practices and different accounting rules in
published financial statements. published financial statements. Also, as in the analysis of Hung and Subramanyam Also, as in the analysis of Hung and Subramanyam
(2004), companies that presented a negative book value under both accounting standards (2004), companies that presented a negative book value under both accounting standards
we were included in our sample. we have included in our sample. Finally, certain companies that did not have the end, certain companies that did not have the
necessary data were not included in the present study. data needed are not included in this study. Taking into consideration all of the Considering all
above criteria, a total of Eighty-three companies were included for the examination of the criteria above, a total of eighty-three companies, including for examination
value relevance. relevance value.
All the data was Extracted from the Capital Market Commission and the Athens Stock All data taken from the Capital Market Commission and the Athens Stock
Exchange. Exchange.
For the final sample of companies that were Examined, we obtained accounting for the end of the sample firms studied, we get an accounting
information from the financial statements that had been prepared up until the Presently the information from the financial statements that had been prepared up to now
applied accounting standards in Greece, as well as the international standards for the year applicable accounting standards in Greece, as well as the international standards for the year
that preceded the compulsory accounting changeover to the IAS, ie 2004. preceding accounting mandatory changeover to IAS, which is 2004. It is a This is
remarkable fact that in the present study, in opposition to the study of Hung and remarkable fact that in this study, contrary to the study of Hung and
Subramanyam (2004) and corresponding with other studies as well, an Overwhelming Subramanyam (2004) and with related studies of other, very large
majority of the companies that composed the sample were compelled to adopt and apply majority of companies comprising the sample were forced to adopt and implement
the IAS from the current legislation and did not proceed in voluntary adoption. the IAS of the laws and regulations and does not continue in the voluntary adoption.
Of Table 1 reports the names of the Eighty-three companies that were used for the Table 1 reports the names of eighty-three companies that used to
present analysis. present analysis. Table 2 records the distribution of sample companies that were used in Table 2 records the distribution of sample firms used in the
The regressions under each sector. in the regression under each sector. Table 2 also states that the companies are Examined Table 2 also states that the company review
uniformly distributed amongst the sectors. distributed evenly between the sectors. Specifically, it can be observed that no sector specifically, can be observed that no sector
exceeds 16 per cent in participation, while a large concentration of companies appear in more than 16 percent in participation, while the concentration of large firms appear in
the sectors of construction & materials, basic resources, food & beverage, industry construction sector goods & materials, basic resources, food & beverage, industrial goods
& Services, and personal & household goods. & Services, and personal & household.
4. 4. Methodology Methodology
As reported previously, the aim of the present study is to investigate the repercussions As reported previously, the purpose of this study is to investigate the reaction
of applying the IAS to the financial statements of Greek companies. application of IAS for the Greek company's financial statements. For this reason, the For this reason, the
Influence of the IAS is Examined regarding relevant accounting and financial magnitudes examined the influence of IAS on the size of the relevant accounting and financial
indicators as well as how the IAS differentiates the value relevance in the two Examined indicators and also how to distinguish the value relevance of IAS in the two examined
accounting systems. accounting system. In order to obtain answers to the above questions, the methodology to obtain answers to the questions above, the methodology
applied was based mainly on the corresponding method that was used in the analysis of applied based primarily on the proper methods used in the analysis of
Hung and Subramanyam (2004). Hung and Subramanyam (2004). With this methodology it is possible to draw upon the With this methodology it is possible to draw up
data of a sample companies for a particular year based on the two systems and corporate data samples for a particular year based on the two systems and
Consequently, to compare directly accounting magnitudes under the IAS and the GAS. consequently, to directly compare the amount of accounting under IAS and GAS.
Specifically, we first took the published financial statements of Greek companies for the In particular, we first received the financial reports published by the Greek company
year 2004, the final year in which the GAS were applied. In 2004, the last year in which GAS was applied. For the purpose of Collecting For the purpose of collecting
accounting data for 2004 based on the IAS, we reviewed the financial statements of accounting data for 2004 based on the IAS, we examined the financial statements
companies for 2005. companies for the year 2005. In 2005, the first year of compulsory application of the IAS in the year 2005, the first year of mandatory application of IAS in
Greece, companies were compelled to publish, for comparison reasons, the published Greek, the company was forced to publish, for comparison reasons, the published
statements of 2005 along with the accounting magnitudes of corresponding months in 2005 and the statement together with the amount of accounting and related year
those of 2004 under the IAS. the year 2004 under IAS. In this way, and in following the pioneering methodology In this way, and in following the pioneering methodology
Hung and Subramanyam (2004), we collected data based on the two accounting standards Hung and Subramanyam (2004), we collected data based on the two accounting standards
for the same year and for the same companies, a fact that allows us to check any possible for the same year and for the same company, a fact which allows us to examine every possible
differences in the two systems via a cross - sectional analysis. differences in the two systems through the cross - sectional analysis.
In Identifying how the accounting changeover Examined influences the accounting in identifying how to check the influence of accounting accounting changeover
magnitudes of balance sheet and profit & loss account, the descriptive statistics (ie the amount of the balance sheet and profit & loss, descriptive statistics (ie
the mean, median, and standard deviation) of these magnitudes were Examined, along with the mean, median, and standard deviation) of these quantities inspected, along with the
The IAS and GAS, and was recorded whether the differences between the two accounting of IAS and GAS, and recorded whether the differences between the two accounting
systems were statistically significant or not. system is statistically significant or not. Specifically, the differences in the mean were Specifically, the mean difference
based on pair wise t - tests, in the median on signed rank tests, and in standard deviation is based on the pair wise t - test, the average rating on entry tests, and standard deviation
under the control of distribution with F statistic. under the control of distribution by F statistic.
At the same time, with the purpose of Investigating the cross-correlation of accounting At the same time, with the aim of investigating the cross-correlation of accounting
magnitudes with the share prices (value relevance), the accounting book of large magnitudes of stock prices (value relevance), the amount of accounting books
value and net income were used. value and net income is used. Moreover, it should be noted that, as with numerous Moreover, it should be noted that, as with many
corresponding studies, the share prices represent the fundamental value of the company. appropriate studies, stock prices represent the fundamental value of the company.
As reported in the above literature review, numerous studies have investigated the As reported in the literature review above, several studies have investigated the
question of value relevance. questions about the relevance of values. However, two kinds of models have been used. However, two types of models have been used. One uses one uses
share prices as the dependent variable (price models) and the other share returns (stock price returns as the dependent variable (price models) and the other back shares (return
models). model). These two approaches are connected to the problem that exists in the two approaches are connected to the existing problems in
international bibliography regarding the question of which of the two models should be an international bibliography on the question of the two models should be
used in such kind of studies. This kind used in the study. Moreover, the price models present a series of comparative addition, the model presents a series of comparative price
advantages versus the return models, in that they render possible the examination of two benefits versus the model again, in that they may make the examination of two
accounting items of information in one model simultaneously (eg as with book value accounting items of information in one model simultaneously (eg as with a net book value
and net income). and net income). This advantage is important, as it is likely to record the trade offs between these benefits is important, because the possibility to record a trade-off between
the value relevance of book value and net income (Hung and Subramanyam, 2004). value relevance of book value and net income (Hung and Subramanyam, 2004). In the
contrast with the above advantages, the record price models Disadvantages of contrast with the above advantages, disadvantages record price model
econometric heteroskethasticity such as nature and scale problems, which in the return heteroskethasticity econometric nature and scale of such problems, which in return
models are either erased or are at least limited. good model removed or at least limited. Due to the existence of these problems in Because of this problem
both the price we Examined models, the numbers of shares were used as a deflator. The second model we checked the price, the number of shares used as deflators.
The first of the two models used in our analysis Examined how much the accounting first of the two models used in our analysis to check how many accounting
magnitudes of book value and net income of rendering information that is included in the share of book value and net income information is included in the share of
prices for each one of the Examined accounting systems separately (Relative value price for each one of the accounting system be examined separately (Relative value
relevance). relevance). The theoretical background of this model is found within the company the theoretical background of this model is found within the company
valuation theory. valuation theory. According to the analysis of Ohlson (1995), the share price, which is according to the analysis of Ohlson (1995), the stock price, which is
considered as the value of the company, can be Expressed in the form of a linear model is considered as the value of the company, can be expressed in the form of a linear model
where the independent variables represent the book value and net income. where the independent variable representing the net book value and net income. Therefore, in Therefore, in
the present study, the book value and net income are treated as independent variables. this research, the book value and net income are treated as independent variables.
Consequently Examined the first model is the following: As a result, the first model examined is as follows:
P it = a + b BV P it = a + b BV
it is
+ C + C NI NI
it is
+ E + E
it is
(1) (1)
Where Where
P P
it: the share price for the company i at the end of year t (2004), it: i the company's stock price at the end of year t (2004),
BV BV it was
::
The book value of equity per share for the company i at the end of year t book value of equity per share for the company i at the end of year t
NI NI it was
::
the net income after taxes per share for company i at the end of year t. net income after tax per share for company i at the end of the year t.
It should be noted that the prices of both the book value and net income are produced should be noted that the price of the second book value and net income generated
after the subtraction of minority interests. after deduction of minority interests.
As in the study of Hung and Subramanyam (2004), model (1) was Examined in three As in the study of Hung and Subramanyam (2004), model (1) examined in three
different ways: a) Treating the book value as a unique independent variable, b) Treating the variety of ways: a) treat the net book value as a unique independent variable, b) treat
net income as a unique independent variable, and c) with these two accounting net income as a unique independent variable, and c) with the two accounting
magnitudes treated simultaneously in the same model as independent variables. quantities are treated simultaneously in the same model as the independent variable. Thus we So we
applied the model of linear regression, taking into consideration all of the above cases. applying the linear regression model, taking into account all the cases above.
The aim of the above regressions can be found in the cross-Correlations. Goal regression above can be found in the cross-correlation. All of the above All of the above
regressions were calculated using data under IAS and GAS. regression is calculated using the data in the IAS and GAS. In addition, the differences in addition, the differences
coefficients and adjusted R-Squares were recorded. coefficients and adjusted R-squared was recorded. Specifically, the tests in special coefficients, tests on the coefficient
are based on t-tests and the tests in Adjusted R-Squares are based on tests Voung (Voung, based on t-tests and tests in Adjusted R-squared test based on Voung (Voung,
1989). 1989).
In contrast to the first model, where we Examined accounting magnitudes for each contrast to the first model, in which we examined the accounting quantity for each
accounting system separately (Relative Value Relevance), in the second we model accounting system separately (Relative Value Relevance), in the second model we
investigate how much the accounting magnitudes under the GAS provide more investigating how many big accounting under GAS provides more
information than those of the IAS (Incremental Value Relevance). information from the people of the IAS (Incremental Value Relevance). Specifically, the Special,
Examined second model is the following: check the second model is the following:
P it = a + b BV_IAS P it = a + b BV_IAS
it is
+ C + d BV_DIF it NI_IAS it + C + d BV_DIF it's NI_IAS
+ +
e NI_DIF e NI_DIF it was
+ E + E
it is
(2) (2)
Where, Where,
P it P it
::
The share price for the company i at the end of year t (2004) the company's stock price i at the end of year t (2004)
BV_IAS it's BV_IAS
::
The book value of equity per share for company i at the end of year t under the equity book value per share for company i at the end of year t under
The IAS The IAS
BV_DIF it's BV_DIF
::
The book value of equity per share under the GAS - book value of equity as book value of equity per share under the GAS - book value of equity per
share under the IAS share under IAS
NI_IAS it's NI_IAS
::
the net income after taxes per share for company i at the end of year t under the net income after tax per share for company i at the end of year t under
The IAS The IAS
NI_DIF NI_DIF
it is
: The net income per share under the GAS - net income per share under the IAS: Net income per share in the GAS - basic earnings per share under IAS
For both of the above equations (Relative and incremental value relevance) in order to For the second equation above (Relative and incremental value relevance) in order to
avoid inaccurate results due to multicollinearity, we applied the methodology of Ridge avoid inaccurate results due to multicollinearity, we applied the methodology of Ridge
regression. regression. However, at this point we have to mention that it is the first time the However, at this point we have to mention that this is the first time
methodology of Ridge Regression is applied in this kind of studies. Ridge regression methodologies used in these studies. Therefore, the results, therefore, the results
of the relative and incremental value relevance and generally the conclusions of our study and the additional value of relative relevance and general conclusions of our study
obtain grater importance due to the application of the innovative methodology of Ridge get grated important because the application of innovative methodologies Ridge
Regression. Regression. Finally, for the analysis of the data, the statistical packages SPSS, EViews, and finally, for the analysis of the data, statistical packages SPSS, EViews, and
Mini-tabs were used. Mini tab is used.

5. Results
5.1 The consequences of the new accounting system with regard to accounting consequence of 5.1 new accounting system with regard to accounting
magnitudes and indicators of the financial statements and indicators of the magnitude of financial statements
Table 3 presents the descriptive statistics (ie Mean, Median, and Standard Deviation) Table 3 presents the descriptive statistics (ie Mean, Median, and Standard Deviation)
of economic and accounting variables from the balance sheet and the profit & loss of economic and accounting variables from the balance sheet and the profit & loss
account, for both accounting standards and the statistical significance of their difference. accounts, both for accounting standards and statistical significance of their differences.
Specifically, we observe that the parametric and non-parametric tests detected significant Specifically, we observe that the parametric and non-parametric tests detected significant
difference with regard to the means and the medians in the Tangible Assets (TN.A), Total Differences related to the means and the median in the Tangible Assets (TN.A), Total
Fixed Assets (TFA), Inventories, Total Liabilities (TL), and Asset Turnover (ATO) Fixed Assets (TFA), Inventories, Total Liabilities (TL), and Asset Turnover (ATO)
variables. variables. There are also uniform results in the means and medians for the variables Book There are also results in a uniform means and median for the variables Book
Value (BV), Sales, Net Income before Taxes (NIBT), Net Income (NI), Return on Assets Value (BV), Sales, Net Income before Taxes (NIBT), Net Income (NI), Return on Assets
(ROA), Return on Equity (ROE), and Profit Margin (PM), while findings resulted Refuted (ROA), Return on Equity (ROE), and Profit Margin (PM), while denying the findings
in the variables of Total Current Assets (TCA), Total Assets (TA), and Leverage (Lev). in the variable Total Current Assets (TCA), Total Assets (TA), and Leverage (Lev).
We also observed a differentiation in the changeability for the most of the above we also observed differentiation in volatility for the most in the
variables as shown by the levels of statistical significance regarding the standard variables as demonstrated by the level of statistical significance regarding the standard
deviation (eg TFA, TA, BV, NIBT, ROA, ROE, and Lev) deviations (eg TFA, TA, BV, NIBT, ROA, ROE, and Lev)
The above results also show that the introduction of the IAS either identifies more above results also show that the introduction of IAS better identify
assets and liabilities or measures them at higher prices. assets and liabilities or their actions at a higher price. The results of the balance sheet balance sheet results
analysis appear to speak in favor of the idea that the GAS are more conservative in the analysis appeared to speak in support of the idea that GAS is more conservative in the
relation with the IAS. relationship with IAS.
In summarizing the above findings, the adoption and application of the IAS In summarizing the above findings, the adoption and application of IAS
considerably influence a great deal of accounting magnitudes and financial indicators. far greater influence scale accounting and financial indicators.
The results showed that the categories of tangible assets, fixed assets and total liabilities results showed that the categories of tangible assets, fixed assets and total liabilities
impart considerably higher prices under new accounting standards (IAS). give higher prices under the new accounting standards (IAS). It was still Still
evident that the IAS increase the differences between companies in the majority of clear that the IAS increase the difference between firms in most
balance sheet magnitudes. balance sheet size. The above results appear to be compatible with the principle of the above result appears to be compatible with the principle of
"Fair value" introduced by the IAS and the conservatism of the GAS. "Fair value" introduced by the IAS and the conservatism of the GAS. Simultaneously, the Taken together,
recent changeover accounting shows that it significantly Affects changeover in certain popular latest accounting shows that significantly affect the certain popular
financial indicators that are used to make important decisions. financial indicators used to make important decisions.
. .
5.2 The consequences of the new accounting system regarding the value relevance consequence of the new accounting system regarding the value relevance
accounting accounting magnitudes of quantities
Relative Value Relative Value Relevance of Relevance
The Pearson correlation coefficients for the variables in the model (1) are presented in the Pearson correlation coefficients for the variables in the model (1) are presented in the
Table 4. Table 4. As a first investigation of the Correlations between the share prices and the For the first investigation of correlation between stock prices and
independent variables, the Pearson correlation coefficients show that the book value and the independent variables, the Pearson correlation coefficients show that the book value and
Positively net income relate to the share prices with both accounting standards. positive net income related to stock prices in both accounting standards. However, However,
it is observed the book value has higher correlation with the share prices under the IAS, is observed having a book value of the high correlation with stock prices under the IAS,
in contrast to the net income, which record higher correlation under the GAS. in contrast to net income, which recorded a higher correlation under GAS. In order to To
investigate the magnitude of multicollinearity, we Examined the Pearson correlation to investigate the amount multicollinearity, we examined the Pearson correlation
coefficients for the independent variables of model (1). coefficient for the independent variable model (1). The results showed that the results showed that the
Correlations in question are not very large. the relevant correlation is not too large. Specifically, the correlation between the book Specifically, the correlation between the book
Alue and net income is 55% for the GAS and 62% for the IAS. value and net income was 55% for GAS and 62% for IAS. In the past, many in the past, many
corresponding studies ignored the problem of multicolinearity. study according to ignore multicolinearity problems. For example, in the For example, in the
analysis Sami and Zhou (2004), the Pearson correlation coefficients between the analysis of Sami and Zhou (2004), the Pearson correlation coefficients between the
independent variables "book value" and "net income" recorded Correlations greater than the variable "book value" and "net income" was recorded correlation greater than
70%. 70%. However, no effort was made to limit the phenomenon by omitting some variables, however, no effort was made to limit the phenomenon by omitting some variables
(or modifying the model), because both independent variables were vital for their (or modify the model), because these two independent variables are important for
analysis. analysis. Moreover, in accordance with the analysis of Hung and Subramanyam (2004), it Moreover, in accordance with the analysis of Hung and Subramanyam (2004), pp
does not require further clarification and analysis. does not require further clarification and analysis. Although multicollinearity does not Although no multicollinearity
seem to be an important problem in our model (in comparison with other similar studies), seems to be an important problem in our model (compared with other similar studies),
in order to check the extent that multicollinearity influences our results we applied the in order to examine the extent to which multicollinearity affects our results we apply the
methodology of Ridge Regression. Ridge Regression methodology. Therefore, we extend the studies which ignore the Therefore, we extend the study ignores
effect of multicollinearity by applying this innovative methodology. multicollinearity effects by applying this innovative methodology. However, in contrast, however, in contrast
to the majority of the studies we did not limit the phenomenon by omitting a variable for most of the studies we did not limit the phenomenon by eliminating the variable
from the model, as both independent variables were vital for our research. of the model, either as an independent variable that is important for our research. Specifically, Special,
through the innovative methodology of Ridge regression we managed to correct the effect through an innovative methodology Ridge regression we managed to improve the effect
of multicollinearity by using both independent variables ( "book value" and "net income") from both multicollinearity by using the independent variable ( "book value" and "net income")
in the same model simultaneously. in the same model simultaneously.
Table 5 presents the results of the relative value relevance after the application of Table 5 presents the results of the relative value relevance after the application of
Ridge Regression. Ridge Regression. The results for each Examined models include the coefficients of results for each model examined include the coefficient
independent variables with the corresponding levels of statistical significance and the independent variables with the appropriate level and statistical significance
adapted coefficients of determination (Adjusted R ^ 2 indicators). adjusted coefficient of determination (Adjusted R ^ 2 indicators). The Adjusted R ^ 2 The Adjusted R ^ 2
indicator is used in order to Reveal the explanatory power of each model and in such a indicator that is used to reveal the explanatory power of each model and in such
find the way Correlations between the share prices and the Examined accounting how to find the correlation between stock prices and accounting review
information. information. Beginning our analysis with the indicator in question, it is observed that, in our analysis Start with the indicator in question, it is observed that, in
the model where the book value is treated as a unique independent variable, the model where the book value is treated as a unique independent variable, the
explanatory power of the IAS is greater than that of the GAS (32.6% as opposed to the explanatory power of the IAS is greater than that of the GAS (32.6% as opposed to
22.9%). 22.9%). However, the difference between the two systems (-9.7%) is not statistically However, the difference between the two systems (-9.7%) is not statistically
significant at the conventional levels. significant at conventional levels. Conversely, in the model where the net income is the contrary, in the model where the net income
treated as a unique independent variable, the situation is reversed and the GAS presents a treated as a unique independent variable, the situation is reversed and the present GAS
greater explanatory power than that of the IAS (69% as opposed to 54.2%), but also notes that explanatory power is greater than that of the IAS (69% compared to 54.2%), but also not
statistically significant. statistically significant. Finally, in the combined models, it is observed that the GAS have Finally, in the combined models, it is observed that the GAS had
a greater explanatory power with regard to both the book value and net income (66.3% greater explanatory power related to both the book value and net income (66.3%
versus 54.6% of the IAS). versus 54.6% of the IAS). However, the difference between the two systems (11.7%) is, however, the difference between the two systems (11.7%) is
not statistically significant. not statistically significant. Therefore, from the examination of the Adjusted R ^ 2 Therefore, from the examination Adjusted R ^ 2
indicators it seems that the value relevance of accounting information (in combination or indicators it appears that the value relevance of accounting information (in combination or
separate) does not record improvement after the introduction of IAS. separately) does not record improved after the introduction of IAS.
Following the examination of the Adjusted R ^ 2 indicators, we will deal with the After examination Adjusted R ^ 2 indicators, we will deal with the
coefficients of each model. coefficient of each model. Starting again from the model where the book value is treated Start again from the model where the book value is treated
as a unique independent variable, we observe that the coefficients of the book values are as a unique independent variable, we observe that the coefficient of book value
statistically significant at the 1% level. In accordance with the observed levels of
statistical significance of the coefficients' difference, we observe that the coefficients do
not differ based on the IAS or the GAS. In contrast, in the model where the net income is
treated as a unique independent variable, the results are slightly different. Specifically, it
is recorded that although the net income coefficients are significant with regard to both
accounting systems at less than 1% level, that of GAS appear to be greater than the
equivalent of the IAS (9:58 as opposed to 7.93). By Examining the difference between
these two coefficients, it was found that it is statistically significant at the 6% level. The It
higher prices of coefficients regarding net income under the GAS are in favor of the
argument that earnings, up until the accountant Presently applied standards in Greece, are
smoother and therefore more stable than those of the IAS (Hung and Subramanyam,
2004). In finishing the analysis of relative value relevance, we examine a model that also
includes both accounting magnitudes as independent variables, so that we might have a
more explicit picture. The recorded results are rather interesting. Beginning with the book
coefficients values, we observe that under the GAS the coefficient is not statistically
significant at the conventional levels. Conversely, when the book value is in harmony
with the principles and rules of the IAS, the situation changes and the book value
coefficient presents a statistical significance at a lower than the 1% level. Same equally
interesting as well is the presence of the net income coefficients. Specifically, it is specifically, this
observed that the net income coefficients are statistically significant at a lower than 1%
level with both the IAS and the GAS. In addition, although it is recorded a greater
coefficient under GAS (8:53 as opposed to 6:09 under IAS), the difference between the
two coefficients is not statistically significant at the conventional levels.
Incremental Value Relevance
The Pearson correlation coefficients regarding the variables in the model (2) are presented
in Table 6. in Table 6. As an initial investigation of the correlation of price with independent
variables, the Pearson correlation coefficients show that all the independent variables are
significantly correlated (at the 1% level of statistical significance) with the share prices,
apart from the difference of net income. In order to investigate the magnitude of
multicollinearity, we Examined the Pearson correlation coefficients for the independent
variables in the model (2). The results showed that the Correlations in question are not very
large, with the higher prices recorded under the system of the IAS in the Correlations of
book value with the earnings and the difference of earnings (62% and 53%
respectively), but they continue to remain at low levels. However, as in the Relative Values
relevance, in order to check the effect of multicollinearity in our model, we applied the
methodology of Ridge regression in the incremental value relevance.
Table 7 presents the results of the incremental value relevance after the application of
Ridge Regression. The results show that the coefficient of earnings per share under the
IAS is both positive and statistically significant at a lower than 1% level. At the same At the same time
time however, it is recorded that the adjustments of GAS to net income is both positive
and statistically significant at the 1% level as well, in fact implying that the GAS improve
Incremental value relevance of earnings. On the contrary, the coefficient of book value
per share under the principles of the IAS is also positive and statistically significant at a
lower than the 6% level. Simultaneously, the adjustment coefficient of GAS to book
value is negative and not statistically significant, a result which Indicates that the GAS do
not improve the incremental value relevance of book value. However at this point, we
have to notice that the report of Hung and Subramanyam (2004), which constitutes the
basis for our study, did not examine the adjustments of accounting magnitudes under
domestic accounting standards (Germany standards in that case), as our research suggests.
Conversely, the study Examined the IAS adjustments to accounting magnitudes. For this is
reason, and in order to make our conclusions more precise, we also investigated these
adjustments which indirectly confirmed the results of Table 7.

6. Conclusions
The aim of the present study was to identify the consequences of accounting
changeover from the GAS to the IAS within the published financial statements of Greek
companies. company. The results of this analysis require particular attention, since up until the
Presently applied accounting system in Greece, the Greek accounting standards had a
different foundation and orientation (stakeholder-oriented system) in comparison with the
IAS (shareholder-oriented system).
Comparing the IAS to the GAS in a sample of companies and Exclusively for the year
2004, the results of the present research can be classified as follows: the accounting
magnitudes of tangible assets, fixed assets, and total liabilities record considerably higher
prices in the balance sheets of companies after the accounting changeover. Moreover, the addition,
IAS increase the differences between the companies in the majority of balance-sheet
measures. stroke. At the same time, Examining the relative value relevance of the accounting
information, it was found that the book values of equity, in contrast to net profits, play a
more important role under the IAS in comparison with that of GAS. However, from the, however, from
examination of the Adjusted R ^ 2 in the relative value relevance, no improvement was
recorded in the relative value relevance of accounting information either (book value
and / or net income) after the introduction of IAS. Finally, in Examining the Incremental
value relevance, it was recorded that the GAS adjustments to book value (book value
GAS - book value IAS) are not statistically significant, while those of GAS to net income of
(net income GAS - IAS net income) are statistically significant. The validity of the value
relevance (relative and incremental) results is increased as the effect of multicollinearity
is corrected through the application of the innovative methodology of Ridge regression.
In summary, the findings of this study seem to be consistent with the notion that GAS are
more conservative, while IAS are characterized by the principle of "fair value" and lay
emphasis on the balance sheet.
Since in Greece the local accounting standards give emphasis to the protection of
investors and taxation (stakeholder oriented accounting system), the results of the present
study can be compared to the results of corresponding studies with similar methodology
that examine the effects of the IAS in countries with similar accounting systems. For For
example, the analysis of Hung and Subramanyam (2004) for Germany recorded results
similar to ours. Up until the obligatory application of the IAS, Germany and Greece had
the same accounting system (stakeholder oriented accounting system). Therefore, the Therefore,
present study contributes to the international bibliography with regard to the
consequences of applying the IAS in stakeholder-oriented countries (ie Germany,
France, Greece, etc..) And to the indirect comparison between the accounting systems of
stakeholder and shareholder oriented countries.
However, some limitations have to be taken into consideration. In all of the above
regressions we used only the numbers of shares as a deflator in order to reduce the
Disadvantages of Price econometric models. No other deflator was used to confirm the
results. results. Finally, the sample of companies is smaller than that of other market - based
analyzes. analysis.

7. Further research
Considering the given limitations that were reported above, a primary addition to the
present study would be to use a grater sample. The enlargement of the sample would be
Crucial in order to discover whether some of the differences between the two accounting
systems which are non-statistically significant are due to the small sample of companies
that were used. At the same time, for the purpose of carrying out accurate conclusions in
the investigation of value relevance, it would be particularly useful to examine how the
results are differentiated by the usage of another deflator apart from the number of shares
(eg lagged market - value).


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Appendix
Table 1: Sample companies
1.BLUE STAR Ferries
30. 30. ΑΝΕΚ Α.Ε
59. 59. ΚΥΡΙΑΚΟΥΛΗΣ Α.Ε
2. 2. BYTE COMPUTER Α. BEE
31. 31.
ΑΤΛΑΝΤΙΚ
ΣΟΥΠΕΡ
ΜΑΡΚΕΤ
60. 60. Μ. Ι. ΜΑΙΛΛΗΣ Α.Ε.
3. 3. COCA-COLA Α.Ε.
32. 32. ΑΤΤΙΚΕΣ ΕΚΔΟΣΕΙΣ Α.Ε.
61. 61. ΜΙΝ ΙΚΕΣ ΓΡΑΜΜΕΣ Α.Ν.Ε
4. 4. CROWN Hellas CAN Α.Ε.
33. 33. ΒΙΟΚΑΡΠΕΤ Α.Ε.
62. 62. ΜΠΕΝΡΟΥΜΠΗ & ΥΙΟΣ Α
5. 5. CYCLON ΕΛΛΑΣ Α.Ε.
34. 34. ΓΕΝΙΚΗ ΕΜΠΟΡΙΟΥ &
ΒΙΟΜΗΧΑΝΙΑΣ Α.Ε.
63. 63. ΜΠΗΤΡΟΣ ΣΥΜΜΕΤΟΧΙΚΗ
6. 6. ELBISCO Α.Ε.
ΣΥΜΜΕΤΟΧ Ν
35. 35. ΓΕΝΙΚΗ ΤΡΟΦΙΜ Ν Α.Ε.
64. 64. ΜΥΤΙΛΗΝΑΙΟΣ Α.Ε.
7. 7. EURODRIP Α.Β.Ε.Γ.Ε.
36. 36. ΓΕΡΜΑΝΟΣ Α.Β.Ε.Ε.
65. 65. ΝΕΟΧΗΜΙΚΗ Α.Β.Ε.Ε.
8. 8. FG EUROPE
37. 37. ΔΕΛΤΑ PROJECT
66. 66. ΝΗΡΕΥΣ Α.Ε.
9. 9. FANCO Α.Ε.
38. 38. ΔΗΜΟΣΙΟΓΡΑΦΙΚΟΣ
ΟΡΓΑΝΙΣΜΟΣ ΛΑΜΠΡΑΚΗ Α.Ε.
67. 67. ΝΙΚΑΣ Α.Β.Ε.Ε.
10. 10. FASHION BOX ΕΛΛΑΣ Α.Ε 39. ΔΙΕΚΑΤ Α.Τ.Ε.
68. 68. ΠΕΡΣΕΥΣ Α.Β.Ε.Ε.
11. 11. FLEXOPACK
40. 40. ΕΚΔΟΣΕΙΣ ΛΥΜΠΕΡΗ Α.Ε.
69. 69. ΠΕΤΡΟΠΟΥΛΟΣ Α.Ε.Β.Ε.
12. 12. FOLLI-FOLLIE Α.Β.Ε.Ε.
41. 41. ΕΛΒΑΛ Α.Ε.
70. 70. ΠΗΓΑΣΟΣ ΕΚΔΟΤΙΚΗ Α.Ε.
13. 13. FORTHNET Α.Ε.
42. 42. ΕΛΓΕΚΑ Α.Ε.
71. 71.
ΠΛΑΣΤΙΚΑ
ΚΡΗΤΗΣ
Α.Β.Ε.Ε.
14. 14. Goody'S Α.Ε.
43. 43. ΕΛΙΝΟΙΛ Α.Ε.
72. 72. ΠΡΟΟΔΕΥΤΙΚΗ Α.Τ.Ε.
15. 15. IMAKO MEDIA SA
44. 44. ΕΛΛΗΝΙΚΑ ΚΑΛΔΙΑ Α.Ε.
73. 73. ΣΑΤΟ Α.Ε.
16. 16. KLEEMANN Hellas
Abee
45. 45. ΕΛΛΑΤΕΞ Α.Ε.
74. 74. ΣΕΛΜΑΝ Α.Ε.
17. 17. LOGICDIS
46. 46. ΕΛΛΗΝΙΚΗ ΤΕΧΝΟΔΟΜΙΚΗ
75. 75. ΣΙΔΕΝΟΡ Α.Ε.
18. 18. MEVACO AE
47. 47. ΕΛΛΗΝΙΚΗ ΥΦΑΝΤΟΥΡΓΙΑ
Α.Ε
76. 76. Σ ΛΗΝΟΥΡΓΕΙΑ
ΚΟΡΙΝΘΟΥ Α.Ε.
19. 19. MULTIRAMA AEBE
48. 48. ΕΛΤΡΑΚ Α.Ε.
77. 77. ΤΙΤΑΝ
20. 20. COM NOTOS Α.Ε.Β.Ε.
49. 49.
ΕΜΠΟΡΙΚΟΣ
ΔΕΣΜΟΣ
Α.Ε.Β.Ε.
78. 78. ΥΙΟΙ Χ. ΚΑΤΣΕΛΗ Α.Β.Ε.Ε.
21. 21. RILKEN Α.Ε.
50. 50. ΕΤΕΜ Α.Ε.
79. 79. ΦΙΕΡΑΤΕΞ Α.Ε.
22. 22. S & B ΒΙΟΜΗΧΑΝΙΚΑ
ΟΡΥΚΤΑ Α.Ε.
51. 51. Η ΚΑΘΗΜΕΡΙΝΗ Α.Ε.
80. 80. Χ. ΡΟΚΑΣ Α.Β.Ε.Ε.
23. 23. SPACE Hellas AE
52. 52. ΙΝΤΡΑΚΟΜ
81. 81. ΧΑΪΔΕΜΕΝΟΣ Α.Ε.
24. 24. SPRIDER Α.Β.Ε.Ε.
53. 53. ΙΚΤΙΝΟΣ ΕΛΛΑΣ Α.Ε.
82. 82. ΧΑΛΚΟΡ Α.Ε.
25. 25. UNIBRAIN Α.Ε.
54. 54. Κ.Α.Ε. Α.Ε.
83. 83. ΧΑΤΖΗΙ ΑΝΝΟΥ
Holdings Α.Ε.
26. 26. Α.Β. ΒΑΣΙΛΟΠΟΥΛΟΣ
55. 55. ΚΑΡΑΜΟΛΕΓΚΟΣ Α.Ε.
27. 27. Α.Γ.Ε.Τ. ΗΡΑΚΛΗΣ
56. 56. ΚΑΡΑΤΖΗ Α.Ε.
28. 28. ΑΚΡΙΤΑΣ Α.Ε.
57. 57. ΚΡΕΤΑ ΦΑΡΜ Α.Β.Ε.Ε
29. 29. ΑΛΟΥΜΥΛ ΜΥΛΝΑΣ Α.Ε
58. 58. ΚΡΙ - ΚΡΙ Α.Β.Ε.Ε.

Table 2
Distribution of sample firms by industry group
Ν Ν
%%
Retail Stores
7 7
8.43 8.43
Construction & Materials
10 10
12.05 12.05
Travel & Leisure
6 6
7.23 7.23
Basic Resources Basic Resources
9 9
10.84 10.84
Utilities Utilities
1 1
1.2 1.2
Food & Beverage Food & Beverage
10 10
12.05 12.05
Goods & Services Industry
11 11
13.25 13.25
Chemicals Chemicals
4 4
4.82 4.82
Personal & Household Goods
13 13
15.66
Media Media
6 6
7.23 7.23
Oil & Gas Oil & Gas
1 1
1.2 1.2
Technology Technology
5 5
6.02 6.02
TOTAL TOTAL
83 83
100 100

Table 3 Table 3
Descriptive statistics on key accounting ratios and financial measures according GAS and
IAS IAS
(N) (N)
MEAN
MEAN MEAN
MEDIAN MEDIAN
MEDIAN MEDIAN
Std. Std. Dev Dev
Std. Std. Dev Dev
GAS GAS
IAS IAS
GAS GAS
IAS IAS
GAS GAS
IAS IAS
Tangible
ASSETS (93)
101.604.740,6
124,230,215
30.216.560,00
42,426,000
241.524.477,2
263.353.445,3
p: 0.002 ***
p: 0.000 ***
p: 0.21
TFA (93)
122,084,384
166,855,304
39,223,536
67,282,406
255.870.723,9
424.959.787,8
p: 0.024 **
p: 000 ***
p: 0.01 ***
INVENTORIES Inventories
(92) (92)
33.520.966,40
31.170.727,81
15.388.915,66
14.176.415,4
53.298.774,72
52.096.547,11
p: 0.019 **
p: 000 ***
p: 0.45
TCA (92)
108614934.8
105460284.1
63377200.33
62986973.14
144413153.6
150574302.5
p: 0.304
p: 000 ***
p: 0.4
TA (93)
234.474.613,40
270,932,648
120.268.000,5
114,560,000
390.732.843,1
556.698.009,7
p: 0.055 *
p: 0.001 ***
p: 0.01 ***
BV (92)
81.181.289,19
106,435,500
44.125.628,40
49,405,087
98.756.536,05
233,939,875
p: 0.192
p: 0.416
p: 0.01 ***
TL (93)
139,265,031
157.730.909,5
62.744.973,00
73,059,000
274.454.821,5
317.371.557,5
p: 0.000 ***
p: 000 ***
p: 0.09 *
SALES (93)
212.557.777,20
214,459,098
90.533.806,32
89,966,843
478.726.203,1
477,969,094
p: 0.631
p: 0.13
p: 0.5
NIBT (93)
15.885.214,93
15.203.538,89
5.505.655,31
5.417.222,59
44.353.695,46
36.591.889,09
p: 0.653
p: 0.580
p: 0.05 **
NI (87)
10,674,965
11,041,559
3,311,537
3,347,849
29.083.866,85
26.613.499,97
p: 0.742
p: 0.162
p: 0.25
ROE (86)
0.059317953
0.078115116
0.07775
0.0825
0.300082963
0.23879216
p: 0.534
p: 0.917
p: 0.05 **
ROA (87)
0.030450575
0.0368908
0.0289
0.0299
0.055540551
0.07500275
p: 0.290
p: 0.44
p: 0.01 ***
ATO (93)
0.88988925
0.841219
0.8016
0.716
0.58669253
0.544861
p: 0.002 ***
p: 0.003 ***
p: 0.25
Lev (92)
2.1916
2.91172
1.4639
1.4465
2.928001
5.77696
p: 0.161
p: 0.028 **
p: 0.01 ***
PM (87)
0.037450575
0.041396552
0.0351
0.0439
0.08951685
0.092984882
p: 0.572
p: 0.258
p: 0.4
All numbers are in Euros.
The difference in the mean is based on pairwise t-tests, the difference in the median is based on signed rank test
and the difference in standard deviation is based on F criterion. *, **, *** Statistically significant at 0:10,
0:05 and 0:01, respectively.
Definitions: TFA: Total fixed assets, TCA: Total current assets, TA: Total assets, BV: Book value of
equity, TL: Total liabilities, NIBT: Net income before taxes, NI: Net income, ROE: Return on equity,
ROA: Return on assets, ATO: Assets turnover, Lev: Leverage, PM: Profit margin, p: Two-tailed p-value
of the difference between IAS and GAS accounting numbers

Table 4
Pearson correlation coefficients on variables used in the model (1):
P it = a + b BV
it is
+ C NI
it is
+ E + E
it is
Panel A: GAS P
BV BV
NI NI
P P
1.000 1,000
0.000 0,000
BV BV
0.478 ***
1.000 1,000
0.000 0,000
0.000 0,000
NI NI
0.831 ***
0.55 ***
1.000 1,000
0.000 0,000
0.000 0,000
0.000 0,000
Panel B: IAS
P P
1.000 1,000
0.000 0,000
BV BV
0.571 ***
1.000 1,000
0.000 0,000
0.000 0,000
NI NI
0.736 ***
0.620 ***
1.000 1,000
0.000 0,000
0.000 0,000
0.000 0,000

Definitions:
P: price per share at the end of the fiscal year t
BV: Book value per share for firm i at the end of fiscal year t
NI: Net income per share for firm i at the end of fiscal year t
*, **, *** Statistically significant at 0:10, 0:05 and 0:01, respectively

Table 5
Relative value relevance of book value and net income under GAS and IAS (Model 1):
P it = a + b BV
it is
+ C NI
it is
+ E + E
it is
BN only models
NI Only Models
Β V and NI Models
Intercept intercept
BV BV
R ^ 2 R ^ 2
Intercept intercept
NI NI
R ^ 2 R ^ 2
Intercept intercept
BV BV
NI NI
Adj R ^ 2
N = 83
GAS GAS
coefficients coefficients
0.768 0,768
1.35 ***
22.9%
*** 1.846
9.577 ***
69% 69%
1.537 ***
0.215
8.532 ***
66.3%
p - value
0.363 0,363
0 0
0 0
0 0
0.001
0.137
0 0
IAS IAS
coefficients coefficients
0.447 0,447
1.36 ***
32.6% 32.6%
2.19 ***
7.93 ***
54.2%
1.176 **
0.534 ***
6.093 ***
54.6%
p - value
0.548
0 0
0 0
0 0
0.021
0.005
0 0
GAS --
IAS IAS
coefficients coefficients
0.321
-0.01 -0.01
-9.7%
-0.344
1.647 *
14.8% 14.8%
0.361 0,361
-0.319
2.439 **
11.7%
p - value
0.3877
0.489
0.459
0.2619
0.0633
0.404
0.321
0.134
0.398 0,398
0.411
Definitions: Definition:
P: price per share at the end of the fiscal year t
BV: Book value per share for firm i at the end of fiscal year t
NI: Net income per share for firm i at the end of fiscal year t
The tests in coefficients are based on t-tests. The tests in adjusted R-squares are based on Voung Tests
(Voung, 1989). Two tailed p-values are used. *, **, *** Statistically significant at 0:10, 0:05 and 0:01,
each respectively

Table 6 Table 6
Pearson correlation coefficients on variables used in the model (2):
P it = a + b BV_IAS
it is
+ C + d BV_DIF it NI_IAS it
+ +
e NI_DIF it
+ E + E
it is
P P
BV_IAS
BV_DIF
NI_IAS
NI_DIF
P P
1.000 1,000
0.000 0,000
BV_IAS
0.571 ***
1.000 1,000
0.000 0,000
0.000 0,000
BV_DIF
-0.296 ***
-0.534 ***
1.000 1,000
0.007 0,007
0.000 0,000
0.000 0,000
NI_IAS
0.736 ***
0.620 ***
-0.261 **
1.000 1,000
0.000 0,000
0.000 0,000
0.017 0,017
0.000 0,000
NI_DIF
0.109 0,109
-0.198
0.170
-0.356 ***
1.000 1,000
0.329 0,329
0.072 0,072
0.124
0.001 0,001
0.000 0,000
Definitions:
P it: price per share for firm i at the end of the fiscal year t
IAS it BV: Book value per share reported under IAS for firm i at the end of fiscal year t
NI IAS it: Net income per share reported under IAS for firm i at the end of fiscal year t
BV_DIF it: the difference between GAS and IAS book value per share for firm i at the end of fiscal year t
NI_DIF it: the difference between GAS and IAS net income per share for firm i is the end of fiscal year t
*, **, *** Statistically significant at 0:10, 0:05 and 0:01, respectively

Table 7
Incremental value relevance of GAS adjustments to book value and net income (Model 2)
P it = a + b BV_IAS
it is
+ C + d BV_DIF it NI_IAS it
+ +
e NI_DIF it
+ E + E
it is
Intercept BV_IAS BV_DIF NI_IAS
ΝΙ _DIF
Adj R ^ 2
coefficients
1.204 **
0.419 *
-0.316
7.977 *** 7.187 ***
65.5%
p - value
0.038
0.055 0,055
0.213
0 0
0 0
Definitions:
P it: price per share for firm i at the end of the fiscal year t
IAS it BV: Book value per share reported under IAS for firm i at the end of fiscal year t
NI IAS it: Net income per share reported under IAS for firm i at the end of fiscal year t
BV_DIF it: the difference between GAS and IAS book value per share for firm i at the end of fiscal year t
NI_DIF it: the difference between GAS and IAS net income per share for firm i is the end of fiscal year t
Two tailed p-values are used. *, **, *** Statistically significant at 0:10, 0:05 and 0:01, respectively


Table 4
Pearson correlation coefficients on variables used in the model (1):
P it = a + b BV
it is
+ C NI
it is
+ E + E
it is
Panel A: GAS P
BV BV
NI NI
P P
1.000 1,000
0.000 0,000
BV BV
0.478 ***
1.000 1,000
0.000 0,000
0.000 0,000
NI NI
0.831 ***
0.55 ***
1.000 1,000
0.000 0,000
0.000 0,000
0.000 0,000
Panel B: IAS
P P
1.000 1,000
0.000 0,000
BV BV
0.571 ***
1.000 1,000
0.000 0,000
0.000 0,000
NI NI
0.736 ***
0.620 ***
1.000 1,000
0.000 0,000
0.000 0,000
0.000 0.00

Analisa rasio keuangan

Analisa rasio keuangan adalah perbandingan antara dua/kelompok data laporan keuangan dalam satu periode tertentu, data tersebut bisa antar data dari neraca dan data laporan laba rugi. Tujuannya adalah memberi gambaran kelemahan dan kemampuan finansial perusahaan dari tahun ketahun. Jenis-jenis analisa rasio keuangan adalah :

a. Rasio Likuiditas

Rasio ini berguna untuk mengukur kemampuan perusahaan untuk memenuhi kewajiban-kewajiban jangka pendeknya. Ada 3 (tiga) macam rasio likuiditas yang digunakan, yaitu :

* 1) Current Ratio = ……………………
* 2) Acid Test Ratio = …
* 3) Cash Position Ratio = ………………

b. Rasio Solvabilitas

Rasio ini berguna untuk mengukur kemampuan perusahaan untuk memenuhi seluruh kewajiban-kewajibannya (hutang jangka pendek dan hutang jangka panjang). Ada 4 (empat) rasio solvabilitas yang digunakan. yaitu :

* 1) Total Debt To Equity Ratio= ……………………………………………
* 2) Total Debt To Total Assets Ratio= ………………………………
* 3) Long Term Debt To Equity= …………………………………
* 4) Long Term Debt To Total Assets = ……………………

c . Rasio Profitabilitas

Rasio ini berguna untuk mengukur kemampuan perusahaan untuk menghasilkan laba dalam suatu periode tertentu. Ada 4 (empat rasio profitabilitas yang digunakan, yaitu :

* 1) Return On Equity (ROE)= ………………………
* 2) Return On Assets (ROA) = ……………………
* 3) Net Profit Margin= ……………………………………
* 4) Gross Profit Margin = …………………………

Subsistem SIA (sistem informasi akuntansi)

Subsistem sistem informasi akuntansi terdiri dari 5 sistem, yaitu :

1. Sistem Pengeluaran (expenditure system)

Segala peristiwa yang berhubungan dengan usaha mendapatkan sumber-sumber ekonomis yang diperlukan oleh perusahaan, baik berupa barang ataupun jasa, baik pemasok dari luar maupun dari karyawan didalam perusahaan.

2. Sistem Pendapatan (revenue system)

Berhubungan dengan penjualan barang atau jasa yang dihasilkan oleh perusahaan kepada konsumen dan mendapatkan pembayaran dari mereka.

3. Sistem Produksi (production systeme)

Berhubungan dengan pengumpulan, penggunaan dan pengubahan bentuk suatu sumber ekonomi.

4. Sistem Manajemen Sumber Daya (resources management system)

Meliputi peristiwa-peristiwa yang berkaitan dengan manajemen dan pengendalian sumber daya seperti investasi dan aktiva tetap (fasilitas).

5. Sistem Buku Besar dan Laporan Keuangan (general ledger and financial accounting)

Berhubungan dengan transaksi keuangan dan ayat jurnal penyesuaian yang terjadi dalam siklus akuntasi.

laporan keuangan adalah :

Laporan Keuangan adalah :
Bagi pihak-pihak yang berkepentingan terhadap posisi dan kondisi keuangan, sangat membutuhkan informasi keuangan yang dapat diperoleh dari laporan keuangan. Informasi tersebut disusun dan disajikan perusahaan dalam bentuk neraca, laporan laba-rugi, laporan perubahan modal dan laporan arus kas. Informasi tersebut sangat diperlukan oleh pihak-pihak yang go public dalam persiapannya untuk melakukan penawaran umum karena salah satu syarat perusahaan yang go public adalah harus menyerahkan laporan keuangannya selama dua tahun terakhir yang sudah diperiksa oleh akuntan publik.
Setiap perusahaan mempunyai laporan keuangan yang bertujuan menyediakan informasi yang menyangkut posisi keuangan, kinerja serta perubahan posisi keuangan suatu perusahaan yang bermanfaat bagi sejumlah besar pemakai laporan keuangan dalam pengambilan keputusan secara ekonomi. Laporan keuangan harus disiapkan secara periodik untuk pihak-pihak yang berkepentingan. Pengertian laporan keuangan menurut Baridwan (1992 : 17) laporan keuangan merupakan ringkasan dari suatu proses pencatatan transaksi-transaksi keuangan yang terjadi selama dua tahun buku yang bersangkutan. Menurut Sundjaja dan Barlian (2001 : 47) laporan keuangan adalah suatu laporan yang menggambarkan hasil dari proses akuntansi yang digunakan sebagai alat komunikasi untuk pihak-pihak yang berkepentingan dengan data keuangan atau aktivitas perusahaan.
Sedangkan definisi laporan keuangan menurut Munawir (1991 : 2) laporan keuangan pada dasarnya adalah hasil dari proses akuntansi yang dapat digunakan sebagai alat untuk mengkomunikasikan data keuangan atau aktivitas suatu perusahaan.
Dapat disimpulkan laporan keuangan adalah laporan akuntansi utama yang mengkomunikasikan informasi keuangan kepada pihak-pihak yang berkepentingan, sebagai bahan pertimbangan dalam pengambilan keputusan ekonomi.

Dasar Laporan Keuangan
Laporan keuangan perusahaan didasarkan pada aturan-aturan akuntansi dan harus memberikan informasi historis, kuantitatif dasar yang merupakan sekumpulan input yang penting yang digunakan dalam menghitung nilai-nilai ekonomis.

Laporan keuangan terdiri dari :
1. Laporan laba rugi yaitu laporan mengenai penghasilan, biaya, laba-rugi yang diperoleh suatu perusahaan selama periode tertentu.
2. Neraca yaitu laporan mengenai aktiva, hutang dan modal dari perusahaan pada suatu saat tertentu.
a. Aktiva, dibagi menjadi dua yaitu :
- Jangka panjang, yaitu jangka waktu lebih dari 1 tahun
- Jangka pendek, yaitu jangka waktu 1 tahun atau kurang dari 1 tahun.
b. Hutang dapat diklasifikasikan menjadi :
- Dijamin penuh, kreditor yang diberi jaminan sama atau lebih dari besarnya hutang.
- Dijamin sebagian, kreditor yang diberi jaminan kurang dari besarnya hutang
- Kreditur tidak dijamin, kreditor yang tidak diberi jaminan dalam bentuk barang-barang tertentu.
3. Laporan laba ditahan yaitu daftar kumulatif laba yang berasal dari tahun-tahun sebelumnya dan tahun berjalan yang tidak dibagikan sebagai deviden.
4. Laporan arus kas yang menunjukkan operasi perusahaan, investasi, dan aliran kas pembiayaan.

( http://jurnal-sdm.blogspot.com )

Apa itu Akuntansi ?

Apa itu Akuntansi ?

Akuntansi adalah suatu proses mencatat, mengklasifikasi, meringkas, mengolah dan menyajikan data, transaksi serta kejadian yang berhubungan dengan keuangan sehingga dapat digunakan oleh orang yang menggunakannya dengan mudah dimengerti untuk pengambilan suatu keputusan serta tujuan lainnya.
Akuntansi berasal dari kata asing accounting yang artinya bila diterjemahkan ke dalam bahasa indonesia adalah menghitung atau mempertanggungjawabkan. Akuntansi digunakan di hampir seluruh kegiatan bisnis di seluruh dunia untuk mengambil keputusan sehingga disebut sebagai bahasa bisnis.

Apa si Fungsi Akuntansi ?

Fungsi utama akuntansi adalah sebagai informasi keuangan suatu organisasi. Dari laporan akuntansi kita bisa melihat posisi keuangan sutu organisasi beserta perubahan yang terjadi di dalamnya. Akuntansi dibuat secara kualitatif dengan satuan ukuran uang. Informasi mengenai keuangan sangat dibutuhkan khususnya oleh pihak manajer / manajemen untuk membantu membuat keputusan suatu organisasi.

Laporan Dasar Akuntansi

Pada dasarnya proses akuntansi akan membuat output laporan rugi laba, laporan perubahan modal, dan laporan neraca pada suatu perusahaan atau organisasi lainnya. Pada suatu laporan akuntansi harus mencantumkan nama perusahaan, nama laporan, dan tanggal penyusunan atau jangka waktu laporan tersebut untuk memudahkan orang lain memahaminya. Laporan dapat bersifat periodik dan ada juga yang bersifat suatu waktu tertentu saja.

Joseph Schumpeter: Kehidupan dan Pemikirannya

Kehidupan Schumpeter

            Schumpeter yang bernama panjang “Joseph Alois Schumpeter” berumur 67 saat meninggal dunia. Namun jasanya yang besar terhadap pemikiran ekonomi menjadikannya salah satu ekonom paling berpengaruh di abad ke-20.

            Schumpeter dilahirkan di Triesch, Moravia (bagian dari Austria-Hungaria, sekarang Trest di Republik Ceko). Ia merupakan murid yang luar biasa pintar dan sering dipuji oleh guru-gurunya. Ia memulai karirnya dengan mempelajari ilmu hukum di Universitas Vienna di bawah asuhan Eugen von Bohm-Bawerk di mana ia memperoleh gelar doctoral pada tahun 1906.

Tidak beberapa lama kemudian, setelah beberapa perjalanan belajar, ia menjadi professor ilmu ekonomi dan pemerintahan di Universitas Czernowitz pada tahun 1909, begitu pula di Universitas Graz pada tahun 1911, di mana ia menetap hingga perang dunia I.

Pada tahun 1919 hingga tahun 1920, dia menjadi Menteri Keuangan Austria yang sukses. Ia kemudian menjadi presiden bank swasta Biederman pada tahun 1920-1924. Sayangnya bank itu bangkrut pada tahun 1924.

Dari tahun 1925 hingga 1932, ia menjabat suatu posisi penting di Universitas Bonn, Jerman. Karena harus meninggalkan Eropa tengah akibat kemunculan kaum Nazi, di memutuskan untuk berangkat ke Harvard (dimana ia telah mengajar pada tahun 1927-1928 dan 1930), dan kembali mengajar dari tahun 1932 hingga 1950.

Selama tahun-tahunnya di Harvard, dia tidak dianggap sebagai guru yang sangat baik, namun dia memperoleh pengikut yang setia terhadap pemikirannya.

Menurut catatan, Schumpeter tidak begitu diakui di kalangan teman sejawatnya. Hal ini disebabkan karena anggapan bahwa pemikirannya yang kurang sesuai dengan pemikiran Keynesian yang sedang naik daun pada masa itu.

Schumpeter menginspirasi beberapa ekonom matematika pada masanya dan bahkan menjadi presiden Econometric Society (1940-1941). Padahal, Schumpeter bukan seorang ahli matematik, melainkan seorang ekonom yang mencoba mengintegrasikan pengertian sosiologi pada teori ekonominya. Jika ditilik dari masa sekarang ini, ide Schumpeter mengenai siklus bisnis dan perkembangan ekonomi memang tidak ditangkap oleh ilmu matematika pada masa itu. Setidaknya diperlukan sistem dinamik yang non-linear yang telah dibakukan untuk menangkapnya.

Pemikiran-pemikiran Schumpeter

            1. Originalitas Pemikiran Schumpeter

            Jika ekonom Austrian School seperti Hayek dan Mises merubah warisan dari guru mereka dengan cara mereka sendiri, Schumpeter mencoba lebih jauh dengan melepaskan diri dari batasan-batasan yang dibuat dalam hasil karya pendahulunya. Daripada sekedar mengembangkan dan memperkuat beberapa kecenderungan dalam tulisan pendahulunya, dia lebih terbuka pada pengaruh-pengaruh di luar Austria.

            Dalam hal ini, Schumpeter sangat berbuka pada pemikiran Walras yang dia kagumi sebagai seorang ekonom teoritis terbaik. Ia juga menyukai beberapa pengikut tradisi Anglo-Amerika, dimana ia memiliki kontak pribadi secara langsung.

            Ketika berumur dua puluhan, dia melepaskan pengaruh gurunya dengan mengembangakan teori bunga yang berbeda dengan Bohm-Bawerk. Lebih jauh lagi, Schumpeter juga melepaskan tradisi Austria dengan membentuk pendekatan umumnya sendiri, yang disebut sebagai salah satu toleransi metodologi. Pekerjaanya tidak hanya menyangkut pada jenis teori murni yang dibentuk oleh orang Austria sebelumnya, tetapi lebhi luas dan merefleksikan harapan yang tinggi yang diletakannya pada pada ilmu ekonomi matematika dan studi empiris berorientasi kuantitatif.

            Dia bahkan menyebutkan bahwa takdir memungkinkan untuk mengulang kembali pelajaran-pelajarannya, dia ingin menjadi seorang ahli sejarah ekonomi. Luasnya topik yang menjadi minatnya ditunjukkan dalam judul salah satu bab dalam bukunya Business Cycles, di mana ia tuliskan sebagai A Theoretical, Historical and Statistical Analysis of Capitalist Process.

            2. Karya-Karya Utama Schumpeter

Pemikiran Mengenai Pengaruh Entrepreneur dalam Perekonomian

Pada usianya yang masih dua puluhan, Schumpeter telah menemukan ide utama yang dikembangkannya menjadi kemudian di masa-masa mendatang, mulai  dari The Theory of Economic Development (1912, diterjemahkan pada tahun 1934) hingga Business Cycles (1939) dan Capitalism, Socialism and Democracy (1942) yang menggambarkan tentang pentingnya elite entrepreneur untuk perubahan dan pertumbuhan, untuk siklus bisnis, dan untuk keberlangsungan kapitalisme.

Unsur strategis dalam aktivitas Entrepreneur adalah inovasi, yaitu aplikasi dari ide-ide baru dalam tehnik dan organisasi yang Akan membawa perubahan-perubahan dalam fungsi produksi. Inovasi Akan mengerem siklus melingkar dari ekonomi stationer dan menghasilkan perkembangan ekonomi dengan posisi ekuilibrium baru pada tingkat pendapatan yang lebih tinggi.

Dalam perekonomian yang dinamis jenis tersebut, akan muncul bunga, yang diintrepretasikan Schumpeter sebagai bagian dari “pajak” yang dibebankan pada entrepreneur oleh banker sebagai ganti dari adanya inflasi. Berbagai inovasi, yang dipaksa oleh imitator dan speculator akan membuat gerakan siklus.

Teori tentang kaum elite yang disebut entrepreneur tersebut didasarkan pada kontradiksi yang samar antara the mass and the elite. Baginya, kebanyakan agen ekonomi tersebut ditandai oleh kelemahan akan kompetensi dan keinginan:

Kebanyakan orang cenderung melakukan bisnis harian biasanya dan cukup melakukan itu saja. Kebanyakan waktu orang tersebut berada pada tanah yang licin dan usaha untuk berdiri tegak menguras energi mereka dan menghilangkan keinginan mereka untuk eksplorasi lebih jauh….(Lebih jauh, mereka tidak memiliki kekuatan dan keinginan untuk memikirkan berbagai hal. Pekerjaan sehari-hari mereka menekan mereka, organisasi dan pengaruh dari teman-teman mereka menimbulkan rantai yang tidak terputuskan. Ini adalah the masses (Schumpeter, 2002b, 412-13).

Bagaimanapun, Schumpeter secara jelas menuliskan hal berikut untuk menunjukkan perbandingan terhadap the masses.

Sebuah minoritas orang-orang dengan intelegensia yang lebih tinggi dan imaginasi yang lebih lancer percaya akan kombinasi-kombinasi baru…Kemudian ada minoritas yang lebih kecil – dan orang ini bertindak….Ini adalah jenis yang membenci hedonic equilibrium dan menghadapi resiko tanpa ketakutan. Ia tidak mempertimbangkan implikasi kesalahan yang mungkin terjadi padanya, atau memperdulikan apakah seseorang yang bergantung padanya akan kehilangan miliknya pada masa tua…Saat yang menentukan oleh sebab itu adalah energi dan bukan hanya rekaan (Schumpeter, 2002b)

Pengenalan akan kombinasi-kombinasi dari minoritas ini yang ditandai dengan surplus dari energi pikiran merupakan dasar dari teori Schumpeter mengenai perubahan ekonomi, dan kenyataan ini memberi banyak karakteristik mengenai periode bersejarah. Pada bagian awal dari periode, kemajuan terhenti karena seluruh agen ekonomi telah beradaptasi pada suatu sistem cara, kemudian entrepreneur pertama memulai pencarian energetic dan akhirnya melalui tingkat kerjasama dengan bantuan banker. Contoh yang terlihat adalah mereka menunjukkan banyaknya proyek tambahan dari entrepreneur, dan efek utama dari proyek ini adalah pertarungan dramatis dengan agen-agen yang menyukai cara-cara rutin. Jika entrepreneur sukses, beberapa anggota dari agen ekonomi menjadi bangkrut dan kehilangan pekerjaannya, sementera yang lain dipaksa untuk beradaptasi. Efek lain dari tindakan entrepreneur adalah sistem ekonomi menjadi begitu terganggu sehingga inovasi selanjutnya melebihi kemampuan dari orang-orang lainnya. Sebaliknya, akhir yang terjadi adalah munculnya sistem rutin yang baru, tetapi site mini menyediakan tempat untuk gelombang baru entrepreneurship dalam epos yang tidak berakhir.

Pemikiran Mengenai Siklus Bisnis/Business Cycles

Teori siklus bisnis memiliki peranan penting karena banyak orang yang mempercayai tentang keberadaanya. Namun kepercayaan ini bukanlah kepercayaannya yang permanen. Pada abad 19, siklus bisnis tidak dipikirkan sebagai siklus-siklus melainkan sebagai krisis-krisis yang menganggu perkembangan perekonomian yang mulus. Di tahun-tahun kemudian, ekonom dan non-ekonom mulai mempercayai berulangnya krisis-krisis tersebut, menganalisa bagaimana mereka dapat dipisahkan dan dihubungkan dengan struktur ekonomi yang berubah.

Secara Alami, tidak semua siklus ekonomi beroperasi dalam ukuran yang sama (the same yardstick). Klasifikasi berikut, yang pada awalnya diciptakan Schumpeter (1939), membedakan mereka berdasarkan durasinya (dasar ke dasar atau puncak ke puncak):

• Siklus musiman – dalam setahun
• Siklus Kitchin – tiga tahunan
• Siklus Juglar – 9-10 tahunan
• Siklus Kuznets – 15-20 tahunan
• Siklus Kondratiev – 48-60 tahunan

Schumpeter juga menggambarkan “empat fase” dari suatu siklus: boom – resesi – depresi – Recovery (Pemulihan) Dimulai dari mean, boom merupakan kenaikan yang berlangsung hingga puncak dicapai; resesi merupakan penurunan dari puncak kembali ke mean. Depresi merupakan penurunan dari mean menuju dasar. Recovery merupakan kenaikan dari suatu dasar kembali ke mean. Dari mean, kita bergerak ke puncak lain yang merupakan awal dari siklus empat fase lainnya. Dalam hal ini, siklus dalam durasi apapun dapat digambarkan dengan empat fase tersebut – jika tidak fluktasi tersebut tidak benar-benar merupakan siklus.

      Kepercayaan dari ahli teori siklus bisnis yaitu bahwa ekonomi melalui gelombang aktivitas perekonomian. Bagaimanapun, apa yang benar-benar menyebabkan perekonomian menimbulkan aktivitas tersebut merupakan sumber dari perdebatan dan pemikiran imaginatif.

      Seperti semua ahli siklus bisnis lama, kita harus terbiasa pada beberapa fakta empiris. Pertama dan yang terpenting, bukti empiris menunjukkan bahwa selama abad 19, tingkat harga naik turun drastis sementara output lebih sedikit terkena fluktuasi. Oleh sebab itu, analisis awal dari ’siklus-siklus’ didasarkan terutama pada definisi mereka sebagai gerakan tingkat-tingkat harga dan bukan output. Akan tetapi, selama abad dua puluh, selain beberapa pengecualian, apa yang dikatakan siklikal merupakan gerakan dari output pada saat resesi dan depresi, output akan turun rendah, pada saat recovery dan boom, output akan meningkat. Oleh sebab itu, mendefenisikan siklus atau krisis sebagai gerakan dari output merupakan fenomena yang relatif baru.

Pemikiran mengenai Kapitalisme

Kejatuhan kapitalisme, yang diperkirakan oleh Schumpeter dalam “Capitalism, Socialism and Democracy” dan tidak seperti skema Marx, akan muncul sebagai hasil bukan dari kegagalan melainkan dari kesuksesan dari kapitalisme yang dikaitkan dengan takdir dari elite entrepreneur. Seperti yang dikatakan dalam analisis Max Weber, factor yang menentukan di sini adalah kebangkitan rasionalisme, yang membuat kapitalisme berkembang tetapi dihancurkan oleh serat-serat social yang terkandung di dalamnya.

Perusahaan semakin besar dan tidak lagi memiliki perasaan kemanusiaan, dan dengan skala yang besar tersebut, inovasi hingga sekarang merupakan hak dari pemimpin-pemimpin industri, menjadi depersonalized dan ditransformasi menjadi kegiatan administrasi rutin yang dilakukan oleh orang-orang bergaji daripada penerima keuntungan. Orang-orang yang digaji dan pemegang saham melepaskan properti pribadi dan kebebasan kontrak dari kerugian manajemen: kepemilikan yang dematerialized, defunctionalized tidak menghasilkan komitmen moral sebagaimana yang dilakukan bagian vital dari property.

Lebih lagi, kedudukan politik di atas, kelas lama yang berkuasa seperti aristokarasi, bangswaan dan raja-raja, menciptakan kekuatan politik dalam komunitas bisnis, suatu kelompok yang menurut Schumpeter tidak layak berkuasa karena kurangnya kualitas mistis yang berguna dalam memimpin orang lain. Dalam hal ini, Dorongan Schumpeter terhadap pengalaman continental Eropa dipatahkan, setelah adanya Road to Serfdom (1944) oleh Hayek, karena Hayek memvisualisasikan Negara yang kuat sebagai Negara yang menekan, bukan yang dikekang oleh tradisi demokrasi yang kuat.

Pemikiran Schumpeter mengenai Monopoli, Creative Destruction, dan Evolusi Perekonomian.

            Pujian Schumpeter terhadap entrepreneur juga mewarnai pandangannya terhadap monopoli, dimana ia meminta maaf, juga terhadap ekonomika Keynesian, dimana dia sangat menentang. Dia melihat kekuatan monopoli sebagai insentif yang pas dan reward yang tepat bagi entrepreneur yang berinovasi, yang akan menikmati kekuatan tersebut hanya pada jangka waktu yang terbatas, hingga itu dipatahkan dan digantikan dalam rantai “creative destruction” oleh monopoli dari innovator lainnya.

            Untuk alasan-alasan yang mirip, dan juga karena penolakannya secara umum untuk mengikuti pendapat umum “follow the crowd’, dia tetap menentang implikasi kebijakan dari ide-ide Keynes yang dianggapnya sebagai ancaman pada apa yang baginya tampak sebagai faktor pendorong dalam ekonomi, yaitu inisiatif swasta daripada kebijakan public.

            Pekerjaan Schumpeter membahas evolusi social dan ekonomi, dan dia menuliskan hasilnya dalam buku yang disebut Evolutionary Trilogy: The Theory of Economic Development, Business Cycles, dan Capitalism, Socialism, dan Democracy. Akan tetapi, masalah dari penelitian masa kini adalah ketidakmampuannya untuk mengintegrasikan analisis-analisis yang ditemukan dalam buku-buku ini. Bahkan, kita cenderung berspesialisasi dalam kerutinan ekonomi dan transformasi inovatif (perkembangan), dalam analisis kuantitatif mengenai evolusi gelombang ekonomi (siklus), atau dalam koevolusi antara kehidupan ekonomi dan kehidupan sosio-politis (Capitalism). Kekuatan utama dari analisis yang dilakukan Schumpeter, sebenarnya hanya bisa diperoleh dengan mengkombinasikan daerah studi lebih sistematis.

            Salah satu contoh utama dari pandangan luas Schumpeter mengenai proses ekonomi tertuang dalam konsepnya mengenai ‘creative destruction‘ atau penghancuran kreatif. Dapat dengan mudah ditunjukkan bahwa konsep tersebut menyebar pada seluruh trilogy evolusi, tetapi dia pertama kali menunjukkan konsep ini secara eksplisit dalam bukunya Capitalism:

      Poin penting untuk dimengerti saat menghadapi kapitalisme yaitu kita berhadapan dengan proses evolusioner…(hal itu merupakan proses) yang terus menerus merevolusi struktur ekonomi dari dalam (from within), senantiasa menghancurkan bagian lama, senantiasa menghasilkan bagian baru. Proses penghancuran kreatif merupakan fakta penting mengenai kapitalisme. Hal itu terkandung dalam kapitalisme dan harus dihadapi kapitalis yang ingin berlanjut (Schumpeter 1942, 82-83)

            Melalui konsep dari proses destruksi kreatif, Schumpeter secara efektif menjauhkan ide standar mengenai perubahan ekonomi. Pertama evolusi ekonomi bukan merupakan proses pertumbuhan sederhana dimana seluruh sektor dalam kehidupan ekonomi berekspansi secara seimbang. Sebaliknya, ditandai oleh kreasi yang baru dan penghancuran produk dan proses lama. Lebih jauh, banyak dari perusahaan yang muncul dan organisasi lain tidak meningkatkan kompetensi secara mulus dan mengganti area spesialisasi mereka. Akibatnya, sering kali mereka lenyap dalam proses evolusioner. Akhirnya, para pekerja yang kehilangan pekerjaan-pekerjaan mereka sering menghadapi tekanan yang berat dan kehilangna kesejahteraan (welfare loss) yang terlihat lebih jelas dari keuntungan jangka panjang dari evolusi kapitalis. Reaksi mereka meliputi tantangan permanent terhadap lembaga kapitalisme. Oleh sebab itu, proses destruksi kreatif merupakan konsep yang merefleksikan perjuangan kompetitif dan focus terhadap reaksi -reaksi pada kehilangan kesejahteraan sementara pada tingkat mikro dan makro.

            Meskipun konsep Schumpeter mengenai proses destruksi kreatif menggambarkan secara efektif pandangnnya mengenai evoulusi capitalist, namun terlalu umum untuk berbicara mengenai destruksi kreatif dalam literature strategi bisnis dan perubahan structural, masih merupakan pertanyaan terbuka apakah hal itu merupakan konsep yang operasional. Oleh sebab itu, Helmstadter dan Perlman (1996, 1) menyatakannya sebagai suatu slogan yang asal-asalan/careless yang sebaiknya tidak diperhitungkan:

            Schumpeter menulis pada tahun 1942 mengenai destruksi kreatif sebagai bagian utama dari kemajuan, namun pada tahun 1947 dia memikirkan kembali slogannya tersebut dan menggantinya sebagai ‘response kreatif’ sebagai ganti destruksi.

            Hal ini, meskipun demikian, mengindahkan fakta bahwa Schumpeter tidak pernah membuang visinya mengenai destruksi kreatif. Dalam tulisan pada tahun 1947, Schumpeter menekankan respons kreatif karena dia terlibat dalam pendirian Harvard Research Center dalam Sejarah Entrepreneur, tetapi ia masih mempertimbangkannya sebagai suatu akspek terbatas dari keseluruhan proses destruksi kreatif. Kurang dari dua bulan sebelum ia meninggal, di menjawab isu makroskopik mengenai siklus bisnis, dan saat itu ia harus kembali pada keseluruhan proses yang menghasilkan evolusi berbentuk gelombang. Dalam hubungan tersebut, Schumpeter (1949, hal. 326) menyatakan bahwa ‘kita harus meneliti berdasarkan sejarah, proses industri sebenarnya yang menghasilkannya dan dalam melakukannya merevolusi struktur ekonomi yang ada. Oleh sebab itu, ada sedikit keraguan bahwa ia akan terus berfokus pada ‘proses destruksi kreatif yang kita lihat sebagai inti dari kapitalisme’ (Schumpeter 1942, 104).

            Tiga Konsep Berbeda Mengenai Destruksi Kreatif

            Istilah ‘destruksi kreatif’ menjadi ambigu jika dipertimbangkan dalam isolasi dari konteks dimana Schumpeter menggambarkannya. Sebenarnya, kita dapat berpendapat bahwa ada paling sedikit tiga konsep destruksi kreatif tertentu, dan kita dapat menghubungkan konsep-konsep ini atas penemuan Sombart, Simon, dan Schumpeter.

            Makna harafiah dari konsep tersebut menyatakan ‘destruksi’ dalam beberapa aspek memiliki sifat ‘creative’. Sebenarnya, pandangan ini adalah milik Werner Sombar, anggota terkemuka dari German Historical School yang menggunakannya. Dia memakai konsep itu pada buku War and Capitalism, sehingga masalah destruksi menjadi jelas. Mengambil contoh tentang destruksi masal dari hutan Eropa, ia  menyatakan bahwa:

      Dari penghancuran, suatu jiwa kreasi muncul; kurangnya kayu dan keperluan hidup sehari-hari…mendorong penemuan substitutis terhadap kayu, memaksa penemuan substitusi dari kayu, memaksa penggunaan batu bara untuk memanaskan, memaksa penemuan koka untuk menghasilkan besi. Bahwa peristiwa-peristiwa ini memungkinkan perkembangan yang luar biasa dari kapitalisme pada abad 19, tidaklah diragukan oleh orang-orang yang berpengalaman (Sombart, 1913, 207; diterjemahkan oleh Reinert dan Reinert).

            Herbert Simon (1982) memiliki pendapat bahwa bukan destruksi sumber daya sebenarnya tetapi ancaman potensial terhadap keberlangsungan perusahaan yang menyebabkan perubahan dalam cara rutin. Menurut model Simon mengenai cara yang memuaskan, perusahaan-perusahaan mengikuti cara rutin selama mereka mampu mempertahankan performa yang memuaskan. Ketika hal tersebut tidak terjadi, misalkan karena tekanan kompetitif, mereak mulai pencarian inovatif maupun imitative untuk cara yang lebih baik. Jika sukses, mereka membuang cara lama mereka dan akibatnya mereka menghindari destruksi/kerusakan organisasi. Pandangan ini nampaknya sesuai dengan transformasi yang disebutkan mengenai cocok tanam masyarakat belanda pada abad Sembilan belas.

            Sedangkan menurut Schumpeter, kreasi merupakan kejadian yang relatif independen dan bukan merupakan response adaptif terhadap kekurangan atau tekanan lainnya. Oleh sebab itu, inoveasi enterepreneur muncul pertama kali, dan pengenalannya terhadap cara sistem ekonomi yang menyebabkan destruksi dari cara lama. Formulasi Schumpeter mengenai konsep destruksi kreatif dapat dihubungkan dengan skema analitis dari evolusi ekonomi yang dia formulasikan dalam Pembangunan dan Siklus. Menurut skema ini, evolusi dari cara perekonomian cenderung terjadi melalui rentetan kejadian-kejadian:

• Initial equilibrium: titik awal analitik merupakan sistem perekonomian yang didasarkan pada Cara yang solid. Sistem ini diasumsikan memiliki equilibrium yang membiarkan agen ekonomi beroperasi dalam cara yang dibiasakan dari tahun ke tahun.
• Inovasi: Equilibrium awal hancur ketika beberapa innovator memulai perusahaanya. Hal ini menciptkan kenaikan /upswing perekonomian, namun secara perlahan arus inovasi menghilang karena kurangnya ketrampilan inovasi dan kesulitan untuk berinovasi dalam kondisi yang diluar equilibrium awal.
• Ekuilibrium yang dibaharui melalui destruksi kreatif: Pada akhirnya, keinginan besar untuk berinovasi tidaklah cukup untuk mempertahankan kenaikan. Penurunan mempertajam proses kompetitif dalam destruksi kreatif, dimana banyak perusahaan tua dipilih dari sistem ekonomi sedangkan yang lain bertahan dari cara lama yang merusak. Pada akhirnya, sistem cara yang dibaharui dan telah bertahan muncul.
• Evolusi ekonomi sebagai proses destruksi kreatif: Evolusi ekonomi dari sistem cara terdapat dalam equilibria yang dibiasakan dan kerusakan inovatif yang menantang cara tersebut. Proses in menciptakan reaksi sosio-politis yang mungkin mengubah secara radikal fungsi masa depannya.

            Ringkasan dari skema Schumpeter mengenai evolusi ekonomi menunjukkan bahwa dia benar-benar hanya memiliki dua konsep yang berhubungan. ‘Destruksi kreatif’ adalah memilih dari perusahaan-perusahaan atau cara-cara mereka dengan tekanan dari inovasi. ‘Proses destruksi kreatif’ merupakan kombinasi dari seleksi ini dan aktivitas inovatif yang mendorong proses tersebut. Oleh sebab itu, konsep yang luas merupakan sinonim dari evolusi ekonomi yang menekankan karakternya yang dipengaruhi oleh konflik.

Pemikiran Schumpeter mengenai Koevolusi Perekonomian dan Sistem Sosio-Politik

            Sebelum Schumpeter menyelesaikan buku Cycles, dia menerima surat menanyakan mengenai studinya yang berorientasi sosiologis mengenai tujuan kapitalisme. Surat ini secara spesifik menanyakan tentang paragraph terakhir mengenai tulisannya mengenai ‘The Instability of Capitalism‘. Di sini Schumpeter (1982, 395) menekankan:

      Tidak ada hal apapun yang ditulis dalam paper selain fakta-fakta ekonomi dan masalah-masalahnya. Diagnosa yang ada, oleh sebab itu, tidak lebih dari cukup sebagai dasar dari prediksi daripada diagnosa dokter mengenai efek bahwa seseorang tidak memiliki kanker merupakan suatu dasar prediksi bahwa ia akan hidup selamanya. Kapitalisme, sebaliknya, dalam suatu proses transformasi menjadi sesuatu yang lain.

            Pertanyaan mengenai bagaimana cara untuk mempelajari proses transformasi, dan Schumpeter (2000, 309) menjawab bahwa meskipun dia tidak pernah melakukan analisis secara detail, dia telah ‘secara berulang-ulang berpikir mengenai hal itu dan membicarakannya dalam berbagai kesempatan. Lebih jauh, proyeknya dalam Cycles telah mendorongnya untuk bergerak maju:

      Bahwa jika seseorang berpikir mengenai siklus-siklus bisnis sebagai bagian tipikal dari evolusi kapitalis dan jika seseoran gmelihat dalam gerakan jangka panjang, yang kadang kala disebut revolusi industri, sebagai suatu jenis siklus, adalah alami untuk menghubungkan fenomena siklikal secara praktis dari seluruh ilmu ekonomi dan sosiologi dari masyarakat kapitalis (Schumpeter 2000, 309).

            Konsep destruksi kreatif dapat dipandang sebagai alat utama Schumpeter untuk menghubungkan ilmu ekonomi dan sosiologi dari masyarakat kapitalis. Argumennya yang terkenal yaitu bahwa meskipun konsekuensi dari proses evolusioner adalah kenaikan dari standar umum kehidupan, masalahnya yaitu reaksi sosio-politis terhadap kehilangan dan peroleh yang tiba-tiba. Reaksi-reaksi ini dipengaruhi oleh kenyataan bahwa kapitalisme masih meliputi instabilitas dari destruksi kreatif. Orang-orang yang kehilangan cenderung bereaksi dengan kebencian yang kuat dan melupakan isu dari perolehan jangka panjang. Reaksi sejenis itu mendorong pada gerakan pekerja, dan didukung oleh para intelektual dimana kekerasan meningkat atas setiap pencapaian dari evolusi kapitalis.

            Orang-orang yang memperoleh keuntungna dari destruksi kreatif, sebaliknya, tidak dipandang sebagai penahan yang efektif. Menurut Schumpeter entrepreneur dan kapitalis tidak penah menjadi penahan semacam itu, sehingga sistem kapitalis bertahan karena dukungan dari kelas lain seperti sisa-sisa dari feudalism, tetapi ‘strata yang menjaga’ ini telah dihancurkan (Schumpeter, 1942, 135-139). Lebih jauh, kekuatan pendorong dari evolusi ekonomi cenderung kehilangan kemampuannya. Perusahaan yang dikelola pemiliknya dan keluarga borjuis yang bersifat paternalistik -dengan keinginan jangka panjang mengenai keberadaan anak cucunya – mulai terpisah-pisah, dan ini mengurangi motivasi untuk kegiatan entrepreneur. Perusahaan besar mungkin tampak sebagai pengganti yang baik yang cenderung mengotomatisasi kemajuan’, tetapi itu juga ‘menggantikan entrepreneur dan mengkoroupsi borjuis. Oleh sebab itu, menjadi jelas bahwa para pelari sosialisme bukanlah intelektual atau demonstran yang mengkhotbahkannya melainkan Vanderbilts, Carnegies dan Rockefellers.

            Schumpeter menulis mengenai unsur-unsur ini dalam analisisnya mengenai pelemahan proses destruksi kreatif secara tiba-tiba setelah Great Depression dan selama Perang Dunia II, sehingga perspektif yang begitu suram dapat dimengerti. Meskipun demikian, banyak yang mencoba untuk menguji validitas dari prediksi Schumpeter.

            Deviasi dari pendapat yang diterima umum juga menggambarkan banyak halaman dari sejarah yang yang dipaparkan Schumpeter, dan muncul dalam History of Economic Analysis (1954). Pekerjaan ini dilakukan dengan pengetahuan yang sangat khusus, sangat jarang bahkan di awal standard di mana Ekonom lebih mampu mempelajari buku dari pada tehnik matematika daripada masa modern. Karya itu hanya dapat ditandindingi oleh kontribusi Hayek terhadap sejarah ide-ide dan Studies in theory of international trade (1937) karya Jacob Viner.

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