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- Is the CAPM a proper method to be used in the process of computing the value in use? The estimation period effect (using monthly returns)Publication . Lopes, José; Pereda, JorgeIn the impairment process, IAS 36 establishes that the asset (or group of assets) recoverable amount is the highest from the fair value less costs to sell and the value in use. To compute the value in use amount, IAS 36 determines the use of present value technique and establishes guidelines for it, namely for cash flows estimation and the discount rate calculation. The last IAS 36 update is strongly based on the FASB SFAC 7. If we compare the guidelines regarding the use of the present value technique, we will find the text very similar. However, regarding the guidelines of the discount rate to be used in the process of computing the present value, a particular difference can be seen, SFAC 7 determines that the Capital Assets Pricing Model (CAPM) is, in general, not a proper method to be used to compute a discount rate. On the contrary, IASB, and despite the IAS 36 update, kept the use of CAPM as a good solution as a starting point to compute a proper discount rate. CAPM results depend on how the beta element is computed. Bloomberg, Value Line, Baseline and Ibbotson are among those companies, which provide betas based on the CAPM or its enhanced versions. The most important differences in computing betas arise from the type of returns used (daily or monthly), the index used as a proxy for the market portfolio and the estimate period (5 years, 2 years or 1 year). In this paper, applying CAPM (using monthly returns and the index S&P 500 as a proxy for the market portfolio) to a dotcom sample and considering an acceptable materiality level, we analyse the effect of the estimate period on the results (i.e. the discount rate) provided by the model. The results show high discount rates variations (according to the estimation period used), and consequently material variations in the “value in use” indicating that they are not reliable to be used for reliable accounting measurements.
- A taxa de juro sem risco e a informação financeiraPublication . Alberto, Fernanda; Lopes, JoséA determinação do valor atual (ou valor presente) na preparação da informação financeira é imprescindível e recorrente na aplicação dos principais normativos contabilísticos vigentes, mormente as normas internacionais IAS/IFRS. O cálculo desse valor requer necessariamente a adoção de uma taxa de desconto.
- The relevance of the tax effect compared with other dupont model factors in order toxplain the “return on equity” (Listed Companies – France, Germany, Portugal and Spain)Publication . Ferreira, Liliana Raquel Coelho; Lopes, José; Nunes, AlcinaFinancial statements provide information that could explain the return on equity. The DuPont extended model identifies five key ratios/indicators that might explain the performance of a company – tax effect, interest burden, earnings before interest and taxes (EBIT) margin, assets turnover and financial leverage. This study aims to analyze the relevance of the tax effect on the “return on equity” (ROE) when compared with the other DuPont model factors. For the purpose of the study, we selected a sample based on listed companies from the stock markets of France, Germany, Portugal and Spain. The number of companies in the sample is 516. The Ordinary Least Square (OLS) method was used to determine the individual impact of each factor on the “return on equity”. According to our findings, the tax effect and the interest burden play the most important role in order to explain the return on equity.
- Equity in health care financing in Portugal: findings from the Househotd Budget Survey 2010-2011Publication . Quintal, Carlota; Lopes, JoséBackground/objectives: Equity in health care financing is recognized as a main-goal of health policy. There is broad consensus on the normative assumption that healthcare payments should be linked to ability to pay with use related to need, and that ali households should be protected against catastrophic financiai losses related to ill health. The link between payment and capacity to pay hás been evaluated through progressivity índices and protection against financial losses has been assessed through the analysis of catastrophic health payments (CHE), expenditure so high that it might mean that people have to cut down on necessities such as food, clothing or education. CHE is more likely in countries that lack prepayment mechanisms for risk pooling. Empirical data show that CHE remains low in countries where out-of-pocket payments (OOP) represent less than 15-20% of total national health expenditure and where the general government health expenditure is above 5-6% of GDP. In Portugal, in 2010, OOP represented 26% of total health expenditure and government health expenditure was 7% of GDP. This study aims to identify the proportion of households with CHE in Portugal and household factors predicting this outcome. Additionally, progressivity indices are calculated for OOP and private health insurance. Methods: Data carne from the Portuguese Household Budget Survey 2010/201 1 (9489 observations). CHE was calculated using WHO methodology (Xu, 2005); multiple logistic regression analysis was used to identify determinants of CHE; and the convenient regression method was used to calculate the Kakwani index. Results: The global prevalence of CHE is 2.11%, occurring in all expenditure quintiles (4.1% in the 1 stand 1.1% in the 5th). Analyzing the various components of expenditure, the most striking differences across expenditure quintiles refer to medicines (account for 78% of total health expenditure in the 1st expenditure quintile while they weigh 42% in the 5th) and dentist services (weigh 2.48% in the 1st quintile and 18% in the 5th). In the logistic model, households with at least one old person (65 years or more) face 5.3 times more catastrophe than households without elderly members (OR=5. 27; IC= 3.324-8.358); head of household with basic education (compared to secondary/superior) increases risk of CHE (OR= 2.39; IC= 1.342-4.257). Other covariates were not statistically significant. Regarding the Kakwani index, for total OOP it is -0.074 (p-value=0. 000) and for medicines it is -0.225 (p-value=0.000); in terms of regions, Kakwani index is larger for the Centre (-0.132; p-value=0. 000) and lower, not significant, for Azores (0.016; p-value=0.656); for health insurance it is 0.098 (p-value=0. 000). Conclusions: Portugal has a NHS, accessible to all citizens; still, households face a considerable risk of CHE and OOP are particularly regressive in the case of medicines. Although comparisons are not straightforward, the prevalence of CHE in Portugal is at the same level as in many low, and low-middle, income countries. This is a worrying result in a context of high unemployment and wage cuts. Authorities should pay attention to the most vulnerable, especially households with elderly members, and think carefully on policy measures regarding medicine co-payments.
- A utilização do valor de uso nas empresas do PSI 20Publication . Alberto, Fernanda; Lopes, José
- Should internally developed e-commerce websites be capitalized and amortised?Publication . Lopes, José; Jorge, Susana M.Websites used to perform e-commerce are becoming one of the main fixed assets of “dot.com” companies. Some accounting issues arise from the use of e-commerce websites, namely: (i) should the expenses arising from internally developed websites be capitalised and therefore the website treated like an intangible asset? ; (ii) should an ecommerce website be amortised?. In this paper we look at appropriate accounting standards from FASB (FAS 142), AICPA (SOP98-1), IAS 38 from IASB, analysing them and searching for proper accounting treatment. We also analyse the guidelines on this matter provided by FASB - EITF 00-2 “Accounting for Web Site Development Costs”, IASB - SIC 32 “Web Site Costs”, as well as the accounting treatment determined in the UK by the UITF Abstract 29: “Website Development Costs”. We conclude that some expenses incurred on “internally developed” e-commerce websites should be capitalised, but there are differences about the appropriate classification in the balance sheet. As opposed to the EITF 00-2, SIC 32 and UIFT, we suggest that ecommerce websites should be treated in a different way from others websites and they should not be amortised. Instead, they should be periodically tested for impairment.
- The CAPM and variations in the value in use when different assumptions are used to compute the betaPublication . Lopes, JoséIn order to compute de discount rate to be used in the process of accounting measurements, IAS 36 recommends the use of the Capital Assets Pricing Model (CAPM). In this study, considering the use of the CAPM in practice by some entities that provide the betas, and changing some of the inputs used for the regressions performed to compute the beta, we show that the CAPM results could vary widely. Therefore, its use could lead to differences materially relevant in the discount rate. To perform the regressions we used daily returns and changed the estimation period and the market index. The index S&P500 was used as the proxy for the market portfolio. The evidence shows high discount rates variations and consequently potential materially relevant variations in the “value in use”.
- The effect of corporate income taxation on companies financial performance - listed companies on eurozone stock marketsPublication . Baptista, Andreia; Alberto, Fernanda; Nunes, Alcina; Lopes, JoséThe performance evaluation of a company might be based on financial and non-financial factors. However, on top of the main key performance indicators is always profitability. The return on assets and the return on equity are the most used ratios/indicators used to determine financial performance. Therefore, taxation is always a factor that influences the profitability of any business. The tax burden, measured by the tax effect or by the effective tax rate, is an important factor determining the financial performance of companies listed on stock markets. The higher the tax burden (i.e., the lower the tax effect or, the higher the effective tax rate), the lower the profitability and, consequently, the financial performance. Therefore, the differences in the tax law might have an impact on profits taxation. This study aims to analyse the effect of corporate income taxation (tax effect) on return on equity (ROE) of listed companies of eurozone stock markets. The data was collected from listed companies' financial statements in the Eurozone during 2018 (Orbis database). The final sample is based on 750 listed companies from several activity sectors and located in different Eurozone countries. The research results were obtained using the Ordinary Least Square (OLS) regression method. The return on equity average is approximately 12,7%. The tax effect average is approximately 71,4% (i.e., 28,6% in terms of effective tax rate). Therefore, the influence of the tax effect is significant. The results suggest that for the companies listed in the Eurozone stock market, a variation of 1% in the fiscal effect generates a 1,243% variation in the same direction of the ROE. The relationship is positive, as was expected.
- Mensuração e análise da extensão e divulgação das imparidades nas empresas do índice PSI geralPublication . Carneiro, Manuela; Lopes, José; Alberto, FernandaEste trabalho tem como objetivo global analisar e avaliar a mensuração, extensão e divulgação das imparidades nas empresas cotadas na EURONEXT (Bolsa de Valores de Lisboa). Com este estudo visa-se, em concreto, os seguintes objetivos: (i) identificar as empresas que relatam perdas por imparidade e aferir a sua extensão; (ii) identificar os tipos de imparidades (iii); determinar as razões divulgadas pelas empresas para as imparidades de ativos, a base de avaliação utilizada e respetiva divulgação; e, (iv) analisar eventuais efeitos nas demonstrações financeiras. Primeiramente efetua-se a revisão da literatura e o enquadramento normativo, no qual se analisam os aspetos concernentes ao tema da imparidade dos ativos nas normas aplicadas nas empresas nacionais, nomeadamente a Norma Contabilística e de Relato Financeiro (NCRF) 12 e a Norma Internacional de Contabilidade (IAS) 36, embora no âmbito das empresas cotadas assuma maior pertinência a norma internacional. Posteriormente realiza-se uma análise quantitativa e qualitativa, efetuando-se a análise dos dados extraídos das contas das empresas selecionadas. A amostra utilizada é composta por 42 empresas pertencentes ao índice PSI GERAL, no ano de 2009. Os resultados mostram um total de perdas por imparidade no montante de 281 milhões de euros, divididas por 7 setores de atividade. Os motivos das imparidades são variados sendo o mais relevante o relativo ao risco de cobrabilidade dos créditos. Em relação ao processo de determinação das referidas perdas por imparidade, a informação divulgada é reduzida ou inexistente, podendo o impacto sobre os resultados ser significativo.
- Equity in health care financing in Portugal: findings from the Household Budget Survey 2010-2011Publication . Quintal, Carlota; Lopes, JoséEquity in health care financing is recognised as a main goal of health policy. It implies that payments should be linked to capacity to pay and that households should be protected against catastrophic health expenditure (CHE). The risk of CHE is inversely related with the share of out-of-pocket payments (OOP) in total health expenditure. In Portugal, in 2010, OOP represented 26 per cent of total health expenditure (one of the highest among OECD countries). This study aims to identify the proportion of households with CHE in Portugal and household factors predicting this outcome. Additionally, progressivity indices are calculated for OOP and private health insurance. Data came from the Portuguese Household Budget Survey 2010/2011. The prevalence of CHE is 2.11 per cent which is too high for a developed country with a universal National Health Service. Households with at least one old person face 5.3 times more catastrophe and head of household with basic education (compared to secondary/superior) doubles the risk of CHE. Payments are particularly regressive for the case of medicines. The Kakwani index is larger (negative) for the Centre and lower, not significant, for Azores; payments for voluntary health insurance are progressive.