The usefulness of the business model disclosure for investors’ judgements in financial entities. A European study

Abstract

The business model concept is a common topic investigated in different fields of research. To participate to the debate around such concept in the accounting field, the objective of this paper is showing whether and how the voluntary disclosure of the non-mandatory IASB (2010) macro-components, that we consider the key elements of a business model of financial entities, increases the value relevance of accounting amounts. Analyzing a sample of 124 European financial entities over the period 2010–2013, the paper shows that the value relevance of accounting amounts of entities that provide a wide disclosure of their business model is higher than the one of entities that provide a limited disclosure of their business model. These findings not only shed lights about the importance of disclosing information relating to the business model to improve the usefulness of accounting amounts for investors’ strategies, but also have implication for regulators and standard setters that from results could learn the opportunity to make the disclosure of IASB (2010) compulsory for all the IAS/IFRS compliant entities