Jump to ContentJump to Main Navigation
Show Summary Details
More options …

Review of Law & Economics

Editor-in-Chief: Parisi, Francesco / Engel, Christoph

Ed. by Cooter, Robert D. / Gómez Pomar, Fernando / Kornhauser, Lewis A. / Parchomovsky, Gideon / Franzoni, Luigi

3 Issues per year


CiteScore 2017: 0.30

SCImago Journal Rank (SJR) 2017: 0.195
Source Normalized Impact per Paper (SNIP) 2017: 0.410

Online
ISSN
1555-5879
See all formats and pricing
More options …
Volume 13, Issue 3

Issues

Recognition of Non-Controlling Interest in Consolidated Financial Statements Based on Property Rights

André Casajus / Helfried Labrenz
  • Institut für Unternehmensrechnung, Finanzierung und Besteuerung, Wirtschaftswissenschaftliche Fakultät, Universität Leipzig, Grimmaische Str. 12, 04109 Leipzig, Germany
  • Email
  • Other articles by this author:
  • De Gruyter OnlineGoogle Scholar
Published Online: 2017-04-22 | DOI: https://doi.org/10.1515/rle-2015-0050

Abstract

We suggest a recognition of non-controlling interest in consolidated financial statements that takes into account the property rights structure within subsidiary companies, in particular, majority requirements on restructurings, which may differ between countries. Our approach rests on a property rights index based on cooperative game theory. This index captures a parent company’s ability to acquire future gains of the subsidiary.

Keywords: consolidation; majority requirements; property rights; Shapley value

MSC 2010: 91A12; 91B99

JEL Classification: C71; G32; G34; M41; M44

References

  • Aerts, W., and P. Walton. 2013. Global Financial Accounting and Reporting: Principles and Analysis, 3rd ed., Andover: Cengage Learning.Google Scholar

  • Alchian, A.A. 1967. “How Should Prices Be Set?,” 32 Il Politico 816–829Google Scholar

  • Ballwieser, W. 1987. “Grundsätze der Aktivierung und Passivierung,” in E. Castan, Ed., Beck’sches Handbuch der Rechnungslegung. Vol. I. München Beck: Abschnitt B 131.Google Scholar

  • Baluch, C., D. Burgess, R. Cohen, E. Kushi, P. Tucker, and A. Volkan. 2010. “Consolidation Theories and Push-Down Accounting: Achieving Global Convergence,” 3 Journal of Finance and Accountancy 1–12.Google Scholar

  • Banzhaf, J.F. 1965. “Weighted Voting Does Not Work: A Mathematical Analysis,” 19 Rutgers Law Review 317–343.Google Scholar

  • Baxter, G.C., and J.C. Spinney. 1975. “A Closer Look at Consolidated Financial Statement Theory,” 108 (1) CA Magazine 31–36.Google Scholar

  • Beams, F.A., J.H. Anthony, B. Bettinghaus, and K. Smith. 2012. Advanced Accounting, 11th Edition. Boston et al.: Pearson.Google Scholar

  • Bell, W.H. 1925. Accountants Reports. The Ronald press company: New York.Google Scholar

  • Bertsch, A. 1995. Rechnungslegung von Konzernunternehmen – Probleme und alternative Konzeptionen. Physica-Verlag: Heidelberg.Google Scholar

  • Bushman, R.M., and A.J. Smith. 2001. “Financial Accounting Information and Corporate Governance,” 32 Journal of Accounting and Economics 237–333.CrossrefGoogle Scholar

  • Cahan, S.F., S. Courtenay, and P. Gronewoller. 2000. “Value Relevance of Mandated Comprehensive Income Disclosures,” 27 Journal of Business Finance & Accounting 1273–1301.Google Scholar

  • Carson, G.C. 1923. “Elimination of Intercompany Profits in Consolidated Statements,” 36 (1–6) Journal of Accountancy 390–391.Google Scholar

  • Casajus, A., H. Labrenz, and T. Hiller. 2009. “Majority Shareholder Protection by Variable Qualified Majority Rules,” 28 (1) European Journal of Law and Economics 9–18.CrossrefGoogle Scholar

  • Christ, A.D. 2013. Verbriefungsplattformen nach IFRS, Konsolidierungsprüfung von Zweckgesellschaften. Frankfurt a.M.: Springer.Google Scholar

  • Coase, R.H. 1988. “The Nature of the Firm: Influence,” 4 Journal of Law, Economics, & Organization 33–47.Google Scholar

  • De Alessi, L. 1990. “Development of the Property Rights Approach,” 146 (6–11) Journal of Institutional and Theoretical Economics 19–23.Google Scholar

  • Demsetz, H. 1967. “Toward a Theory of Property Rights,” 51 (2) American Economic Review 347–359.Google Scholar

  • Dreger, K.-M. 1969. Der Konzernabschluß: Grundsätze ordnungsmäßiger Konsolidierung. Konzernrechnungslegung nach Aktienrecht 1965 in Anlehnung an Technik und Praxis in den USA. Wiesbaden: Gabler.Google Scholar

  • Ebeling, R.M. 1995. “Die zweckmäßige Abbildung der Anteile fremder Gesellschafter im Konzernabschluss nach deutschem HGB,” 55 Die Betriebswirtschaft 323–346.Google Scholar

  • Ebert, M. 2010. Der Konzernabschluss als Element der Corporate Governance. Wiesbaden: Gabler.Google Scholar

  • Furubotn, E.G., and S. Pejovich. 1972. “Property Rights and Economic Theory: A Survey of Recent Literature,” 10 (4) Journal of Economic Literature 1137–1162.Google Scholar

  • Furubotn, E.G., and R. Richter. 1991. “The New Institutional Economics: An Assessment,” in E.G. Furubotn and R. Richter, Eds. The New Institutional Economics. College Station: Texas A&M University Press 1–34.Google Scholar

  • Gillan, S.L. 2006. “Recent Developments in Corporate Governance: An Overview,” 12 Journal of Corporate Finance 381–402.CrossrefGoogle Scholar

  • Griesar, P. 1998. Verschmelzung und Konzernabschluss. Düsseldorf: IDW-Verlag.Google Scholar

  • Gynther, R.S. 1967. “Accounting Concepts and Behavioral Hypotheses,” 42 The Accounting Review 274–290.Google Scholar

  • Hail, L., C. Leuz, and P. Wysocki. 2010. 24 “Global Accounting Convergence and the Potential Adoption of IFRS by the U.S. (Part I): Conceptual Underpinnings and Economic Analysis,” Accounting Horizons, 355–394Google Scholar

  • Hart, S., and A. Mas-Colell. 1989. “Potential, 57 (3) Value, and Consistency,” Econometrica 589–614.Google Scholar

  • Hendrikson, E.S. 1965. Accounting Theory. Irwin: Homewood.Google Scholar

  • Hylton, D.P. 1966. Principles and Procedures of Modern Accounting Practice. New York: Prentice-Hall.Google Scholar

  • Jensen, M.C., and W.H. Meckling. 1976. “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure,” 3 Journal of Financial Economics 305–360.CrossrefGoogle Scholar

  • Kester, R.B. 1925. Accounting Theory and Practice, Vol. II. New York: Ronald PressGoogle Scholar

  • Küting, K., and C. Weber. 2010. Der Konzernabschluss. Stuttgart: Schäffer-Poeschel.Google Scholar

  • La Porta, R., F. Lopez-de-Silanes, A. Shleifer, and R. Vishny. 2000. “Investor Protection and Corporate Governance,” 58 Journal of Financial Economics 3–27.CrossrefGoogle Scholar

  • Lamla, M. 1997. Grundsätze ordnungsmäßiger Umwandlungsprüfung. Wiesbaden: Deutscher Universitäts-Verlag.Google Scholar

  • Larcker, D.F., S.A. Richardson, and I. Tuna. 2007. “Corporate Governance, Accounting Outcomes, and Organizational Performance,” 82 The Accounting Review 963–1008.CrossrefGoogle Scholar

  • Leech, D. 1988. “The Relationship between Shareholding Concentration and Shareholder Voting Power in British Companies: A Study of the Application of Power Indices for Simple Games,” 34 (4) Management Science 509–527.CrossrefGoogle Scholar

  • Lopes, A.I., I. Lourenço, and M. Soliman. 2012. “Do Alternative Methods of Reporting Non-Controlling Interests Really Matter?,” 38 Australian Journal of Management 7–30.Google Scholar

  • Matena, S. 2004. Bilanzielle Vermögenszurechnung nach IFRS – Konzept und Analyse der Zurechnung von Vermögenswerten zum bilanziellen Vermögen von Unternehmen. Düsseldorf: IDW Verlag.Google Scholar

  • May, L. 1986. “Corporate Property Rights,” 5 (3) Journal of Business Ethics 225–232.CrossrefGoogle Scholar

  • Montgomery, R.H. 1923. Auditing Theory and Practice, 3rd Edition. New York: Ronald Press.Google Scholar

  • Morck, R., D. Wolfenzon, and B. Yeung. 2005. “Corporate Governance, Economic Entrenchment, and Growth,” 48 Journal of Economic Literature 655–720.Google Scholar

  • Müller, V. 2012. “Value Relevance of Group Financial Statements Based on Entity versus Parent Company Theory: Evidence from the Largest Three European Capital Markets,” 21 Annals of the University of Oradea, Economic Science Series 949–955.Google Scholar

  • Myerson, R.B. 1980. “Conference Structures and Fair Allocation Rules,” 9 International Journal of Game Theory 169–182.CrossrefGoogle Scholar

  • Newman, D.P. 1981. “An Investigation of the Distribution of Power in the APB and FASB,” 19 (1) Journal of Accounting Research 247–262.CrossrefGoogle Scholar

  • North, D.C. 1986. “The New Institutional Economics,” 142 Journal of Institutional and Theoretical Economics 230–237.Google Scholar

  • Owen, G. 1975. “Multilinear Extensions and the Banzhaf Value,” 22 Naval Research Logistics Quarterly 741–750.CrossrefGoogle Scholar

  • Pellens, B., N. Crasselt, and T. Sellhorn. 2009. “Corporate Governance Und Rechnungslegung,” 61 Zeitschrift für Betriebswirtschaftliche Forschung und Praxis 102–113.CrossrefGoogle Scholar

  • Picot, A. 1991. “Ökonomische Theorien der Organisation – Ein Überblick über neuere Ansätze und deren betriebswirtschaftliches Anwendungspotenzial,” in D. Ordelheide, B. Rudolph and E. Büsselmann, Eds. Betriebswirtschaftslehre und Ökonomische Theorie. Stuttgart: Poeschel 144–170.Google Scholar

  • Pieroth, J. 1994. Schutz von Minderheitsgesellschaftern bei nicht-verhältniswahrenden Spaltungen von Kapitalgesellschaften. Frankfurt Main et al.: Peter Lang.Google Scholar

  • Posner, R.A. 2007. Economic Analysis of Law. Austin et al.: Wolters Kluwer.Google Scholar

  • Reiland, M. 2006. Derecognition – Ausbuchung finanzieller Vermögenswerte – Eine Analyse der Regelungen in IAS 39, SFAS 140 und FRS 5. Düsseldorf: IDW-Verlag.Google Scholar

  • Richter, R., and E.G. Furubotn. 2010. Neue Institutionenökonomik, 4th ed. Tübingen: Mohr Siebeck.Google Scholar

  • Roth, A.E. 1977. “The Shapley Value as a Von Neumann-Morgenstern Utility,” 45 Econometrica 657–664.CrossrefGoogle Scholar

  • Ruhnke, K., and D. Simons. 2012. Rechnungslegung nach IFRS und HGB, 3rd ed. Stuttgart: Schäffer-Poeschel.Google Scholar

  • Schmeidler, D. 1969. “The Nucleolus of a Characteristic Function Game,” 17 SIAM Journal of Applied Mathematics 1163–1170.CrossrefGoogle Scholar

  • Schmidt, M. 2003. “Economic Considerations on the Regulation of the Accounting of Hybrid Organisational Forms (In German: Ökonomische Überlegungen zur Rechnungslegungsregulierung hybrider Organisationsformen),” 63 Die Betriebswirtschaft 138–155.Google Scholar

  • Selto, F.H., and H.D. Grove. 1983. “The Predictive Power of Voting Power Indices: FASB Voting on Statements of Financial Accounting Standards Nos. 45-69,” 21 (2) Journal of Accounting Research 619–622.CrossrefGoogle Scholar

  • Shamrock, S.E. 2012. IFRS and US GAAP: A Comprehensive Comparison. Hoboken, NJ: Wiley.Google Scholar

  • Shapiro, N.Z., and L.S. Shapley. 1978. “Values of Large Games I: A Limit Theorem,” 3 (1) Mathematics of Operations Research 1–9.CrossrefGoogle Scholar

  • Shapley, L.S. 1953. “A Value for N-Person Games,” in: H. Kuhn and A. Tucker, Eds. Contributions to the Theory of Games, Vol. II. Princeton: Princeton University Press 307–317.Google Scholar

  • Shapley, L.S., and M. Shubik. 1954. “A Method for Evaluating the Distribution of Power in a Committee System,” 48 American Political Science Review 787–792.CrossrefGoogle Scholar

  • Shleifer, A., and R.W. Vishny. 1997. “A Survey of Corporate Governance,” 52 The Journal of Finance 737–783.CrossrefGoogle Scholar

  • So, S., and M. Smith. 2009. “Value Relevance of IAS 27 (2003) Revision on Presentation of Non-Controlling Interest: Evidence from Hong Kong,” 20 Journal of International Financial Management & Accounting 166–198.CrossrefGoogle Scholar

  • Sunley, W.T. 1923. “Minority Interests in Intercompany Profits,” 35 Journal of Accountancy 350–355.Google Scholar

  • United States Supreme Court, 2002. 535 U.S. 274.

  • Weber, C. 1991. Praxis Der Kapitalkonsolidierung im Internationalen Vergleich. Stuttgart: Schäffer Poeschel.Google Scholar

  • Wurgler, J. 2000. “Financial Markets and the Allocation of Capital,” 58 Journal of Financial Economics 187–214.CrossrefGoogle Scholar

  • Young, H.P. 1985. “Monotonic Solutions of Cooperative Games,” 14 International Journal of Game Theory 65–72.CrossrefGoogle Scholar

  • Zeff, S.A. 1978. “The Rise of Economic Consequences,” 146 The Journal of Accountancy 56–63.Google Scholar

About the article

Published Online: 2017-04-22


We are grateful to Matthias Herfert, Frank Huettner, Esther Pittroff, and a number of anonymous referees for valuable comments on this paper. Financial support for André Casajus by the Deutsche Forschungsgemeinschaft (grant CA 266/4-1) is gratefully acknowledged.


Citation Information: Review of Law & Economics, Volume 13, Issue 3, 20150050, ISSN (Online) 1555-5879, DOI: https://doi.org/10.1515/rle-2015-0050.

Export Citation

© 2017 Walter de Gruyter GmbH, Berlin/Boston.Get Permission

Comments (0)

Please log in or register to comment.
Log in