Corporate Reporting in Central and Eastern Europe: Issues, Challenges and Research Opportunities

Abstract

The purpose of this paper, building upon the papers included in this special section of Accounting in Europe on Corporate reporting in CEE countries and on our knowledge of the region, is to broaden out and open up dialogue and debate about how local institutions are evolving and impact the corporate reporting practices in this under-researched region. We begin by discussing the institutional context for conducting research on corporate reporting by entities in Central and Eastern Europe (CEE), within the broader context of emerging, transitional economies. We also reflect on how research conducted on CEE countries can make a relevant contribution to the international literature, and exemplify by summarizing the research questions and findings of the papers included in the special section. A future research agenda emerges, given the gaps in the international literature and the future research implications suggested in the papers constituting the special section.

Keywords:

• corporate reporting
• Central and Eastern Europe
• research opportunities

1. Introduction

We introduce the special section of Accounting in Europe on Corporate reporting in CEE countries by discussing in broader terms the emerging challenges and opportunities of conducting research on corporate reporting in this under-researched setting, and by summarizing and reflecting on the research questions and findings of the papers included in the section. This special section represents a diverse collection of research that seeks to uncover and provide context for some of the corporate reporting practices in Central and Eastern Europe (CEE), to an international audience.

We called for papers dedicated to corporate reporting in CEE countries, given their diverse and rich institutional context, and the infrequent publication of research on CEE countries in the recent international literature. We have attracted in total 20 submissions dealing with various aspects of the accounting domain, from authors affiliated with institutions in 14 countries from both the CEE and western regions. The predominant themes of submissions related to the financial reporting by listed (e.g. accounting quality, IFRS, goodwill impairment) and non-listed entities (e.g. private corporate reporting, information needs of SMEs) complemented by studies on auditing, integrated reporting, intellectual capital, transparency and accountability. We have received both longitudinal and snapshot studies, comparative or focused on only one country, written by sole authors or in teams, from one or more countries. The authors of the papers that passed the first round of review were invited to present their research in dedicated sections organized during the 11th Accounting and Management Information Systems (AMIS) conference held in Bucharest, on 8–9 June 2016. For each paper, we have allocated an experienced discussant whose main task was to offer feedback to the authors on how to incorporate and deal with the issues raised by the reviewers.

We have included in the special section five papers, four covering the countries of Belarus, Poland, Romania and Slovenia, individually or comparatively, and one covering the wider CEE region. They employ diverse methodological approaches, have policy implications and should nurture future academic and practitioner research.

We open the special section with a paper that builds on the five selected contributions and our knowledge of the institutional setting, shedding some light on the broader context of the region and hopefully further stimulating debate and academic investigation in this and other emerging or transitional settings. A future research agenda emerges, given the gaps in the international literature and the implications of the papers included in the special section.

2. The Institutional Context for Conducting Research on Corporate Reporting Practices in CEE

The CEE region is under-represented in the recent international accounting literature, albeit being an interesting institutional setting that offers many avenues for conducting accounting research. CEE countries are considered in many outlets as being emerging or developing, since they represent, from an economic perspective, a different cluster within the European Union (EU) (Farkas, 2011). These economies, along with any others that were classified as ‘transitioning’, ‘emerging’ or ‘developing’ at some point in time and space, raise an increasing interest from the economic, financial, political and administrative standpoints. Although historically most of these countries were not entirely disconnected from the more ‘advanced’ rest of the world, either by economic, financial or social ties, most or all of them departed at some point from the generally accepted principles of democracy, market competition or liberalism. Even though there still is little agreement on what makes an economy ‘emerging’ (Ezzamel & Xiao, 2011), or at what point in time (Roztocki & Weistroffer, 2008), such countries generally followed a path of moving from spheres of strong or excessive political oppression toward a market-based economy. These successive stages sometimes happened over relatively short timespans and impacted drastically their evolution.

CEE countries entered under the Soviet influence after the Second World War, seeing their economic development stopped or declined. However, the late 1980s into the early 1990s witnessed unparalleled economic upheavals (Zecchini, 2013) that helped these countries regain international attention and consideration. Reforms across all domains were brought about very quickly, but amid serious economic crises, against the nonexistence of any equity markets, and with a whole new system that was to be built without the knowledge of how to do it (Aslund, 2013). Other realities of the transitioning period included the prevalence of weak banking sectors (Mueller & Peev, 2007), monetary overhang and fiscal freedom that led in some countries to hyperinflation (Matousek & Sarantis, 2009), reversed later on (Igan & Suzuki, 2012). Financial assistance from western countries was minimal in the early 1990s, which made the transition efforts lag in some cases (Aslund, 2013).

The transition of the CEE countries toward market economies was deemed successful in most cases, despite the high perceived corruption and weak government performance, thin and unsophisticated capital markets, a gap between law development and law enforcement, a predominant banking sector and corporate governance systems with weak protection of shareholders’ rights (Djankov, Nikolova, & Zilinsky, 2016; Mueller & Peev, 2007). Some countries in the region are still unreformed, i.e. Belarus, Turkmenistan and Uzbekistan (Aslund, 2013), while others have joined the EU,¹ indicative of their adherence to European values and regulations. Although the written laws of these countries are similar to or even better than those of western European countries (Mueller & Peev, 2007), enforcement mechanisms in place are rather inefficient.

In short, economic research characterizes the outcomes of the post-communist transition as diverse (Aslund, 2013), which may have consequences for conducting accounting research on this region. For example, from an economic perspective, the World Economic Forum (WEF, 2016) classifies the CEE countries members of the EU as either efficiency-driven, in transition from efficiency to innovation, or innovation-driven. Over this period, the Central European countries have fully emerged into functional market economies, the Baltic ones have combined this evolution with limited public sectors and high economic growth, and the South-Eastern countries straddle in the middle (Aslund, 2013). Accordingly, in the wider economic research, some studies have looked at the CEE region as a whole (e.g. Andor, Mohanty, & Toth, 2015), while some others have looked at various clusters of CEE countries. Geographical examples of such clusters are the Visegrad countries (i.e. the Czech Republic, the Slovak Republic, Hungary and Poland), the Baltic countries (i.e. Estonia, Latvia and Lithuania) and the South-Eastern group (i.e. Bulgaria, Romania and Slovenia) (Aslund, 2013; Huth, Rajčan, & Kubica, 2014; Matousek & Sarantis, 2009; Simionescu, Lazányi, Sopková, Dobeš, & Balcerzak, 2017). Yet some other studies have focused on single countries such as Poland (e.g. Waszczuk, 2013), as the region’s best performer, at least for a good period of time.

In addition to the weak corporate governance and legal frameworks in place after the fall of communism, the financial reporting infrastructure was also deficient. With stock markets considerably smaller than in Continental Europe or Anglo-Saxon countries (Mueller & Peev, 2007), the acutely required reforms were assumed in many instances with less consideration placed on investors’ protection and the development of transparent reporting systems serving external users. The systems of various western economies such as France, Germany or the United States of America were followed, adapted or adopted to various degrees in the reforming CEE countries (Albu & Albu, 2014). However, the financial accounting regulatory process has mostly been a public one, with some support from professional bodies and the private sector in some countries (Albu & Mustaţă, 2013). International Accounting/Financial Reporting Standards became of interest in many of these countries, mostly for legitimacy purposes (Jermakowicz & Gornik-Tomaszewski, 2006), superposed over European Directives and the acquis communautaire that had to be implemented in the countries that envisaged accessing the EU. International Auditing Standards and corporate governance codes of western inspiration were also considered and implemented, sometimes following recommendations from external funding bodies such as the World Bank or the International Monetary Fund. All these (sometimes contradictory) frameworks and systems resulted in hesitations and difficulties in the implementation of financial reporting reforms.

The accounting profession that was lowered to bookkeeping during the communist times had to also update and (re)gain the skills required to apply modern day principles and standards. This process required significant effort, especially given the close connection between accounting and taxation characterizing the systems in place in these countries. The various waves of financial reporting reform had left some other areas of the accounting profession in a dire need for development. Among them, more advanced managerial accounting practices still seem to have a limited application in the firms conducting business in this area. Audit is a pretty new profession, despite the rapid entry on the CEE market of large and mid-tier accounting and auditing firms, and the creation of local and regional firms and networks of firms. Anecdotal evidence regarding an expectations gap that is deeper than in more advanced economies exists in these countries, as preparers and auditors learn to navigate together the ‘fragile and precarious nature of international standardization projects’ (Mennicken, 2008). In this complicated context of several small open economies, where most of the GDP is produced by small- and medium-sized companies (Andor et al., 2015), little is known about the means (institutions, organizations) through which the global (western) standards are ‘imported’ and how ‘the translation and customization’ is realized (Ezzamel & Xiao, 2011). In many cases, the outcome of the reforms is tailored to the local realities and depends on different interpretations of internationally accepted concepts (Kosmala, 2007).

3. Doing Research on CEE Countries – Insights, Gaps and Research Opportunities

Following the particularities of, and changes in, the institutional setting of the CEE countries as detailed above, the research questions to be answered in this region relate to various geographical (sub)settings and areas of corporate reporting, and can be addressed in a variety of methodological and theoretical approaches. Accordingly, we could have structured the future research opportunities by using anyone of these directions. We chose the geographical setting as the main criterion, given two major challenges in doing research on CEE countries: access to data, and cognizing and mobilizing the understanding of the local institutional context. These issues should be seriously considered in order to make a contribution to the international literature. In considering them, and in close relationship with the research question, researchers may conduct either (1) a country-based study, (2) a comparative study of several countries, (3) a comparative study of the entire region or (4) a wider international comparative study. In the remainder of this paper we discuss in more depth each of these approaches; we identify the challenges of doing each particular type of research, we provide insights from the papers included in the special section, and we derive some research opportunities.

3.1. Country-based Studies

As explained above, despite many similarities, the CEE region is very diverse from an institutional perspective, in terms of history and culture, political and business arrangements. The institutional background may and should, therefore, be exploited in country-based studies, based on the authors’ deep understanding of the local realities. Depending on the research question and data used, the single-country case may be presented as ‘unique’ or as an example representative of multiple settings sharing some institutional similarities.

Alexander and Alon (2017) explore the IFRS application in Belarus and insist on the uniqueness of the country’s institutional environment: ‘Although there are commonalities, the differing pace of transition, and the political environment, contribute to unique approaches towards IFRS.’ (p. 265). They employ an institutional framework to structure their discussion around the issues of the IFRS application, and utilize several sources of data (a longitudinal study of local regulations and the annual reports for 2014). This type of research is suitable when seeking to answer questions regarding the role of the institutional infrastructure (including various actors/stakeholders’ interests and behaviors, local rules and institutions, culture or resources) in reforming (or not) the corporate reporting regulations or practices.

This line of research ought to exploit the uniqueness and the problematic side of the local context and to explore the peculiarities of politics, culture and business arrangements. Unique data sets (including, but not limited to, documents in the local language, interviews, direct observation) and a proper theoretical framing are to be employed. Qualitative methods are particularly suited when authors can access this type of data and where it is difficult to have access to reliable data from other sources. Future research directions include: How are western/international rules or techniques translated and adjusted to a particular setting? How do various actors (auditors, national regulators and enforcers, professional bodies, etc.) embrace new ideas and how practices maintain existing institutional arrangements and/or accommodate the new imports? How do national regulations and international standards (e.g. IFRS) co-exist and with what consequences on the reporting practices? This last question addresses the very complex relationship between the national and international standards and rules (e.g. Mennicken, 2008). André (2017) (alongside the papers in this special section) discusses how IFRS are used in the completion of national accounting rules. Alexander and Alon (2017), for example, illustrate how the application of IFRS in Belarus generates dual reporting for different audiences, while Albu and Albu (2014) underline that prior early convergence of national regulations with IFRS enabled the IFRS adoption in some CEE countries. These examples testify to the richness and fruitfulness of this area of research, with applicability to various corporate reporting requirements. Of these, IFRS is probably nowadays the most widely spread topic, yet others are equally promising, including but not limited to, the implementation of corporate governance codes, enforcement rules, auditing standards or the non-financial disclosure requirements.

While also covering only one country, Hadro, Klimczak, and Pauka (2017) and Valentinčič, Novak, and Kosi (2017) speculate on some institutional features that are common to many or most of the CEE countries, and present their case as being informative for the region. Their take is in line with the research question and issues they investigate. Valentinčič et al. (2017) investigate the role of national accounting standards development in the accounting quality of private firms in Slovenia. The authors present Slovenia as being representative of the CEE as such:

we first decide to investigate Slovenia as a representative of the CEE countries, which have a similar history and recent transition to a market economy. Second, we study private firms because the CEE countries feature newly established and weakly developed capital markets with relatively few public firms. Moreover, inefficient capital markets appear to be a general and permanent feature of Eastern European (EE) countries. (p. 359)

Hadro et al. (2017) examine the relationship between the use of impression management techniques in the letters to shareholders and ownership concentration in Poland. The key institutional feature exploited is the ownership concentration, which is used to both argue that Poland is representative of the other CEE countries, and that the case informs the international literature where the incentives for impression management resulting from this institutional feature are underinvestigated.

While both papers follow research approaches from the international literature (measures for accounting quality and for impression management), they exploit local institutional features and employ unique databases. Valentinčič et al. (2017) use data from the Slovenian central database of public legal records, which gives them ‘unique access to financial data for all private firms’ (p. 359), while Hadro et al. (2017) hand-collect and code data from letters to shareholders (written in Polish).

Following this line of investigation, mostly based on an empirical analysis, additional research might focus on how other accounting reporting practices are shaped by the institutional factors shared by the region. The important role of institutional investors, the close relationship between accounting and taxation, the unsophisticated users of financial reports, the low level of enforcement or the poor investors’ protection laws are some of the institutional features characterizing many of the CEE countries (Albu & Albu, 2014; Filip & Raffournier, 2010). Future research might address how one or several of these features impact on corporate reporting issues, such as the IFRS adoption and accounting quality, earnings management or value relevance. These topics are widely investigated in the international literature in various institutional contexts. Therefore, replication studies will not be seen as making a significant contribution to the literature. It is the use of prior literature, the exploitation of the institutional context, and the quality of the data and analyses that will provide authors the opportunity to make such contributions.

Country-based studies are the ones most prone to uncover the extent and magnitude of change. As alluded to in the prior section, CEE countries underwent a significant number of reforms, but they are still expected to improve their institutional infrastructure, practices and overall accountability. Therefore, the CEE context is very fruitful to study change through longitudinal studies. All three papers conducting a country-case study in this special section (i.e. Alexander & Alon, 2017; Hadro et al., 2017; Valentinčič et al., 2017) follow a longitudinal approach in order to uncover change. Many research questions about the progress of reforming the corporate reporting in CEE countries, in terms of regulations, practices or institutional infrastructure, remain to be addressed by future research, in qualitative or quantitative studies.

3.2. Comparative Studies on Two or Several Countries

This type of research is fruitful to inform the international literature about the similarities and differences between countries. Therefore, the selection of countries and the motivation for the choice are extremely important in order to make a contribution to the literature. The countries selected for the comparative case study should share some commonalities, but have some key institutional differences that are able to inform and provide the background for the discussion of the results.

Dumitru, Dyduch, Guşe, and Krasodomska (2017) investigate the quality of non-financial disclosures in Poland and Romania. These two countries are presented as sharing several institutional features, such as being the largest ones in CEE (and therefore more exposed to EU scrutiny), and as having a low level of transparency and pressures to increase accountability. Dumitru et al. (2017) hand-collect data from the 2014 annual report of top 20 Polish and Romanian non-financial listed companies. The key institutional features mobilized to explain the differences in the quality of disclosures between the firms in the two countries is the higher presence of voluntary reporting in Poland compared to Romania, and more prior regulatory demands in Romania compared to Poland. The authors find that in this particular setting of CEE countries (characterized by the common institutional features) prior regulatory demands have a higher impact on the quality of non-financial reporting than the voluntary reporting initiatives.

Future in-depth (covering two or a small number of countries) comparative studies, between CEE countries or between countries from CEE and from other regions (emerging or not), can foster our understanding of corporate accounting practices, of their determinants and consequences. An appropriate research topic to be investigated in a comparative approach in countries characterized by differences in culture, ethics or different degrees of development of the accounting profession is the meaning of various accounting concepts, and its impact on corporate practices (e.g. prudence, ‘probable’, ‘likely’, ‘significant’). Another area of research includes the investigation of the reporting requirements or practices in two or several countries: What is the extent of voluntary disclosure, compliance with regulations or fair value adoption in two countries, and which institutional factors explain the variation (if any)? How transparent are the disclosures? These questions can be addressed by using one or more companies in each country, in a qualitative or quantitative research approach. One particularly insightful avenue for research is to look at how multinational corporations and other international players (international professional bodies or large accounting firms) transfer their knowledge in CEE countries, and to investigate ‘the travel of accounting ideas’ (Ezzamel & Xiao, 2011). Besides the transfer of good practices concerning the application of foreign concepts and rules (e.g. IFRS, corporate governance, non-financial disclosure), other topics to be investigated include transfer pricing, tax evasion and ethics.

Another potential area for research is how two CEE countries incorporated IFRS in their national regulations over time, and how some institutional factors (cultural, political, or economical) impact the convergence process. A starting point in approaching this direction might be the distinction made by Ezzamel and Xiao (2011) in the emerging economies’ effort to reform their accounting regimes: to borrow or to develop their own systems. CEE countries followed various approaches in this respect, and therefore provide a fruitful field to investigate this research question.

3.3. Comparative Studies for the Region

Comparative studies for the region are very appropriate to ascertain the similarities and differences existing across the CEE countries. However, while this type of research would be extremely informative, it has to address several challenges. One very important challenge is data availability. Databases with company-level data are either unavailable to researchers from the region or they include a limited amount of data, in many cases not even for all countries in the region (difficulty explained for the CEE countries by Brüggemann, Hitz, & Sellhorn, 2013, and ICAEW, 2014 in the case of investigating the consequences of the IFRS application). Alternative sources of data might be employed, such as surveys (as for example by Andor et al., 2015 for capital budgeting practices). Yet, other challenges have to be addressed in this case, including language barriers, translation and meaning of concepts in different countries, cost and access to respondents and data reliability. Another alternative is to use country-level data from publicly available sources, but in this case the quality of the data and of the analyses is crucial.

A second challenge is the understanding and mobilization of the institutional context. While data might be publicly available on these countries, the understanding of the institutional context is necessary to discern the level of data reliability, and later to inform the discussion of the results. An example is the year or degree of IFRS adoption as reported in various sources (especially when a binary variable (‘adopted or not’) is employed). The case of Belarus included in this special section illustrates this difficulty.² In publicly available sources (such as the Deloitte database widely employed in this type of studies), Belarus is reported as an IFRS adopter, while Alexander and Alon (2017) explain how this process actually had a small impact on practices. Databases are a simplified version of reality, and have, as any other source of information, their advantages and limitations. The example introduced above illustrates the need for understanding the details behind the numbers reported in large databases, in order to avoid making inaccurate analyses.

Not lastly, the challenge is to conduct research on a smaller, usually under-researched, group of countries, and still make a contribution to the international literature. This is about transforming some limitations related, for example, to the exclusion of developed countries from the study, or to the smaller number of observations, into a strength of the paper, by refining the data collection methodology, and by exploiting the authors’ deep understanding of the institutional context.

Lungu, Caraiani, and Dascălu (2017) empirically investigate the association between IFRS adoption and the foreign direct investments (FDI) inflows on a sample of 23 CEE countries, for the 1996–2014 period. The institutional feature mobilized here to interpret the findings for these countries coming from a region with many similarities is the EU membership, since not all countries included in the sample are members of the EU. The authors find that IFRS adoption positively affects FDI inflows, with a higher impact for those countries that are members of the EU. However, the difference-in-difference tests document a higher increase of FDI inflows after the IFRS adoption in the case of non-EU members compared to the EU members.

Besides the mobilization of the institutional understanding in data analysis, Lungu et al. (2017) also address the challenge in data collection as explained above. They ensure the comparability of findings with prior literature by utilizing data from the same sources (i.e. the Deloitte database and IFRS Foundation’s Jurisdictional Profiles). However, they also tailor their research instrument to the institutional realities of the countries investigated, and provide a more in-depth analysis than larger sample studies, by using an 11-point scale to measure the extent of IFRS adoption. They also cover a long enough period (i.e. 1996–2014) so as to incorporate all major regulatory reforms in the countries included in the sample; shorter time spans would have failed to provide a good understanding of the topic investigated.

Further research in this area might look at other corporate reporting requirements and practices in the region, and at their determinants or consequences. Considering the pressure and objective to achieve economic success, CEE countries are mostly interested in knowing, for example, to what extent the improvements in their regulatory frameworks (of which IFRS is an example) contribute to the country’s economic development? Given the differences between the institutional framework of CEE countries and developed or other emerging economies, comparative studies for the region remain the most appropriate ones to answer this type of questions.

3.4. Large-scale Comparative Studies Including, but Not Limited to CEE Countries

From a policy-relevance perspective, but also for academic comprehensiveness, large-scale comparative studies including, but not limited to, CEE countries, promise to bring interesting results in terms of an overview of practices across a large sample of countries. Such studies may include, for example, EU members, emerging economies in general, or a wider and more diverse international selection of countries. Despite this ambitious promise, this type of study faces several challenges, including data availability and reliability and the difficulty of incorporating the institutional specificities. The research design should be strong enough to incorporate and benefit from the possible commonalities across the countries included in the study, while at the same time not having the results driven by the inherent differences.

None of the papers included in this special section follows this type of approach, which is nevertheless worthy of attention, given its very high potential for results but also challenges of implementation. We will illustrate some of these challenges related to including CEE countries in such studies. First, some of the proxies that are usually employed in such studies for very relevant variables might include mistakes or be outdated. Albu and Albu (2014), for example, report the case of Ukraine showing sometimes very different numbers of listed entities reported in various international databases, but other CEE countries have the same issue. This might happen especially in years when the stock market was reformed, or when it is not clear (or at least for those reporting initially the data) if the number included or not the entities listed on any unregulated markets as well. Besides reporting inaccurate total numbers of listed entities (used potentially as a proxy for market development), such entities are not subject to the same reporting requirements, and their financial reports should not be compared to those issued by the entities listed on the regulated markets. Second, these countries underwent significant reforms. Therefore, values for various variables such as culture, corruption, enforcement, education, investor protection or other proxies for the quality of institutions, dating from 2000, 2005, and, in some cases, even 2010, might not accurately reflect the current institutional context analyzed in relation to current accounting rules and practices.

The causes and consequences of corporate reporting frameworks and practices still represent an area presenting wide opportunities for future research, pending to carefully considering the design of the study (including variables, proxies and sources of data). As emphasized by Gordon, Greiner, Kohlbeck, Lin, and Skaife (2013):

Asking an interesting cross-country accounting research question should be easy as there are endless differences in financial and tax reporting requirements, audit requirements, and regulatory filings in the global economy. However, developing and articulating an interesting and researchable research question can be quite challenging. (p. 144)

3.5. Policy-relevant Research

Research on CEE countries has the opportunity to inform regulators, practitioners and other interested parties, at the national, regional (such as the EU) and international levels. Moreover, the results might be of interest for other emerging economies considering the adoption of specific rules and framework. These countries were and still are a laboratory of reforms. Hence, they provide an excellent field for research that can inform about the pitfalls and successes of regulatory actions.

In line with Accounting in Europe’s policy, the authors of all the papers included in the special section clearly identify the implications of their respective papers for policy and practice. Alexander and Alon (2017) inform mainly national regulators about the institutional arrangements that make practices remain disconnected from the spirit of the regulatory requirements. Dumitru et al. (2017) report to national and regional regulators (since this is an ex-ante study of application of the non-financial reporting EU Directive) that regulatory requirements have an important impact on the disclosure of non-financial information. Hadro et al. (2017) inform regulators, but also capital markets participants, about the requirements surrounding the communication with investors. They find that letters to shareholders remain an under-utilized communication channel, and suggest that regulators should remove regulatory obstacles. Lungu et al. (2017) document that IFRS adoption contributes to an increase in the FDI, which is of interest for the national and regional regulators, as well as for investors and capital markets participants. Valentinčič et al. (2017) provide evidence to regulators, companies and users that accounting quality increases with the development and improvement of accounting standards.

Future research should also consider answering, with data from the CEE context, questions that preoccupy standard setters, regulators, and practitioners. Most of these questions relate to the consequences of accounting and other rules and requirements on transparency, the functioning of capital markets, economic competitiveness and eventually on economic development. Moreover, national regulators and users, in particular, might be interested in learning more about how culture, ethics, corruption and rule of law influence the application of regulations in practice (including, but not limited to, for example, IFRS). National and international policy-makers (including aid agencies) might be interested in understanding to what extent the western/international models (including IFRS, corporate governance codes, enforcement mechanisms or any other regulatory requirements bearing impact on corporate reporting practices) should be viewed as one-size-fits-all instruments, or that they need adjustments in order to function in a local context.

4. Conclusion

This special section, seeking to promote research on corporate reporting in a CEE context, represents a diverse collection of research. The papers uncover some of the corporate reporting practices in CEE countries to an international audience. We targeted papers that would make a contribution to the international literature by using the particularities of the institutional settings present in the CEE countries. Although the acceptance of the papers for the special section is a subjective process, we based our judgment on the incremental contribution that these papers may make to the international literature.

The focus of international scholars on the importance of the institutional features has been rapidly increasing in the last decades. High-quality accounting journals (such as Accounting in Europe or European Accounting Review) show an increasing interest for non-US samples, investigated in diverse institutional settings. This trend provides opportunities for future research that does not fall into the pitfall of merely replicating previous articles, but provides insights into diverse settings, with academic, policy and practice implications. Singleton-Green (2015)³ provides some recommendations intended to increase the policy relevance of academic research, suggestions that mirror our prior arguments: ‘[N]ot assume that surrounding institutions remain unchanged; be careful in cross-country studies across large numbers of countries to understand the specific features of each country and how they have changed; investigate inconsistencies with previous research findings’ (p. 172).

Just like anywhere else in the world, researchers conducting research in CEE countries face major challenges and often a fine trade-off between the access and quality of the data, on the one hand, and the knowledge and familiarity with the institutional environment, on the other. However, readers of an international journal expect an interesting and reliable story, and also one they can relate to. As explained above, CEE countries, separately or together, represent a very fruitful research ‘laboratory’ from an institutional perspective. We strongly believe that there are plenty of institutional particularities in this setting that can make a CEE story worth reading. The contribution can emerge from the particularities of the institutional setting, but aligned with the theoretical framework, methodology and data. We hope that the papers included in this special section represent such examples.

Acknowledgements

We thank the authors, reviewers and discussants for contributing to the success of this special section. We warmly thank Charles Cho, Anastasios Elemes, Robert Faff, Sid Gray, Allan Hodgson, Sebastian Hoffmann, Doris Merkl-Davies, Rucsandra Moldovan and Luc Paugam, for their insightful and very helpful discussions of the papers during the special sections organized with the AMIS 2016 conference. We thank Paul André, the editor of Accounting in Europe, for the opportunity to edit this special section. We acknowledge prior panels and presentations that contributed to the crystallization of ideas presented in this paper introducing the special section: (1) the roundtable ‘Research opportunities in CEE’ organized during the AMIS 2016 conference around this special section; (2) N. Albu’s panel presentation for the panel ‘International accounting research in transitional and emerging economies’ organized at the International Accounting Section of the AAA 2016 midyear meeting, New Orleans, USA. (3) C.N. Albu's panel presentation for the panel ‘Resources for conducting international accounting research’, organized during the same meeting.

Disclosure statement

No potential conflict of interest was reported by the authors.

ORCID

Nadia Albu http://orcid.org/0000-0003-2953-9619

Cătălin Nicolae Albu http://orcid.org/0000-0002-3282-8414

Andrei Filip http://orcid.org/0000-0002-4074-0527

Notes

1 The Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia acceded to the EU in 2004, Bulgaria and Romania in 2007, and Croatia in 2013.

2 Another example is Romania, reported in some papers as being an IFRS adopter since 1999. However, in 1999 Romania issued national regulations convergent with IFRS, applicable to only 13 companies until 2001, when the scope increased (Albu & Albu, 2014). Romania became a proper adopter of IFRS in 2007.

3 These comments are based on the author’s extensive experience with academic research, including the most recent and highly visible experience with preparing for ICAEW the report on the IFRS consequences in the EU (based on the review of 200 research papers), and intended to inform the European Commission and other interested parties.