Profit and loss account variant selection by companies listed on the Warsaw stock exchange : an empirical perspective

Abstract

PURPOSE: The aim of the article is to identify the types of economic entities that prefer the cost-based or comparative format and, consequently, to attempt an assessment of the factors that determine this choice. The work has a theoretical-empirical character, focusing on the analysis of data concerning joint-stock companies listed on the Warsaw Stock Exchange in the research part.

DESIGN/METHODOLOGY/APPROACH: In the theoretical part of the article, an assessment of the financial reporting function is made in the context of providing reliable financial information. Various formats of the Income Statement are discussed, and an analysis of criteria determining the choice of a particular format is initiated. The empirical part includes a characterization of the analyzed sample and formulates conclusions and findings based on the conducted study. The main research method utilized in this work is the analysis of financial statements of joint-stock companies listed on the Warsaw Stock Exchange. The theoretical part is based on literature sources related to financial reporting and the provisions of the Polish Accounting Act.

FINDINGS: The analysis revealed that the dominant format of the Income Statement is the ψομπαρατιωε costing variant and that there is no correlation between the choice of the Income Statement format and variables such as the type and scale of business activities. The research results allow for inferences regarding the utility of a given format for specific groups of economic entities.

PRACTICAL IMPLICATIONS: The choice of the method of preparing the Income Statement is one of the crucial decisions in the area of a company's accounting policy.

ORIGINALITY/VALUE: The analysis did not show a significant correlation between the size of the company and the choice of data presentation method, and similarly, the type of business conducted did not significantly influence this choice. The results confirm that the choice of cost accounting method and Income Statement variant is independent of the parameters examined, suggesting that companies are guided by other considerations when deciding on the reporting method.