The compensation and incentive systems of executive directors have been the subject of particular attention by scholars and regulators for their sig-nificant implications on an economic and social level. Especially in the after-math of the Global Financial Crisis of 2007, compensation practices based on short-term profits were accused of having significantly increased the risk-tak-ing that threatened the global financial system. In order to avoid this repercus-sion, the European Community and Italian regulators issued instruments for encouraging banks to implement remuneration systems complying more with their operational and dimensional characteristics. The last of these rules in the Italian legal framework was the VII Update of “Circolare N° 285 of 17th De-cember 2013” which examines the new rules about the remuneration of bank-ers and executives in the Italian financial sector, and the impact of these rules on the three Italian larger significant banks. Results show that the three Italian banks have not been strongly impacted by these rules. Since 2013, in fact, the remuneration system of the three banking groups examined were characterized by a proper balancing between the fixed and the variable component of remu-neration, as well as by a binding (ex-ante and ex-post) adjusting system. Above all, the new rules have affected the number of the “material risk-tak-ers”, which increased in 2015.
The purpose of this study is to question the basic assumption of the higher value relevance (meaning its superior ability to represent the value of assets and liabilities) of the International Accounting Standard (IAS-IFRS), as compared to Italian accounting practices. Value relevance refers to the vast literature which investigates if and how financial data includes useful information for investors; in other words, if it represents a robust basis for their investment decisions. Analyzing both Anglo-Saxon and other European countries, the literature shows a heterogeneous scenario and divergent results. Unlike previous studies, this study links market and book values by means of the price to book value ratio, considering a sample of Italian listed companies on the Mercato Telematico Azionario, the main segment of the Italian Stock Exchange. Moreover, to strengthen the empirical results the research takes into account a longer period (1996-2015), bearing in mind the change in Italian accounting practices occurring in 2005 as a result of the adoption of IAS-IFRS. The study is consistent with that part of the literature which argues that the accounting discipline underlying IAS-IFRS shows a discrepancy between its theoretical purpose of expressing the current value of a company and its applicable accounting standards. In this respect, the results obtained are somewhat different from the mainstream view, suggesting that the introduction of the IAS-IFRS does not contribute to reducing the gap between the stock market capitalization and the respective book value of a company. Therefore, the Italian national accounting discipline, based on conservative accounting, quite surprisingly appears more value relevant; in other words, it seems to be more able to capture the business value assumed by investors.
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