Determinants of firm's innovation: increasing the transparency of financial statements

Abstract

In terms of economic globalization and digitalization, the enterprise's financial reporting is a communication channel for transferring accounting information to stakeholders. The full and effective perception of user credentials is threatened by communication barriers that could lead to erroneous management decisions. Thus, it is necessary to improve financial reporting through feedback mechanisms to minimize the negative impact of communication threats to the accounting system. The purpose of this article is to identify basic communication of financial reporting, their minimization through ensuring the transparency of accounting information and calculation of analytical indicators. The article highlights the basic communication barriers to the perception of accounting information, which include unclear financial reporting indicators due to different interpretations of accounting concepts; the inadequate level of knowledge of the subjects of the communication process (communicator and recipient); the inaccuracy of information due to intentional or unintentional actions; lack of clarity in accounting regulations on the interpretation and structure of individual objects of accounting; information oversaturation; availability of non-target communications; availability of informal communications; inefficiency of the communication channel. The influence of communication threats to the accounting system on the example of forming the Ukrainian form of financial reporting Balance (Financial Statement) is substantiated. It is proposed to transform the form of financial statements Balance Sheet (Financial Statement) in Ukraine by separating two sections in assets «Non-current assets» and «Current assets») and three in liabilities («Equity», «Long-term liabilities» and «Current liabilities») to optimize the analysis of the financial condition, which will contribute to the effective perception of accounting and analytical data by stakeholders. The criterion of minimizing the impact of communication risks should be used to transform other forms of financial and integrated reporting. The proposals could be useful in reformatting financial reporting forms in other countries to ensure transparency and maximize the perception of accounting information.

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“…[72], [73], [23], [74] different risks such as impersonation [70] and Man in the Middle(MiTM) attacks [71].…”

“…In addition, public investors, regulators, and government bodies strongly rely on accessible and accurate financial information to execute data-driven and well-informed decisions for future investments in the organizational entities. For instance, transparent financial accounting [76] and related reports [73] ensure that companies disclose their financial performance, allowing public investors to assess risks and opportunities to proceed or deny potential invest-ments. Manipulated financial performance indicators expose investors to a massive risk.…”

Account management, innovative management, and audit quality affect the accounting performance of small and medium enterprises in Thailand

“…For business decisions and users' investments, financial statements play a significant role (Zadorozhnyi, Ometsinska, & Muravskyi, 2021). All too often, business annual reports demonstrate an optimistic picture however, it is not that.…”

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“…Проблемам транспарентності фінансів присвятили свої роботи І. Білоцька [6], З-М. Задорожний, І. Омецінська, В. Муравський [7], Ж. Дерій, Н. Завгородня [8], В. Новіков [9], Р. Костирко, О. Замай [10] Вартість бізнесу залежить від різних факторів, таких як прибутковість, фінансова стабільність, динаміка зростання, ризики та можливості для розвитку. Одним з ключових чинників, який може вплинути на вартість бізнесу, є його рівень транспарентності.…”

“…У світлі зростаючих очікувань споживачів та стандартів корпоративної відповідальності, бізнеси знаходяться в постійній необхідності підвищувати свою транспарентність. Транспарентність в бізнесі вимірюється не лише обов'язковою звітністю перед органами регулювання та інвесторами, але й глибоко вбудованими цінностями та культурою підприємства [7].…”