This article provides an analysis of the economic incentives and financial reporting for Special Purpose Entities (SPEs) over the last four decades. The analysis explains economic factors motivating business use of SPEs and the origins of SPEs in lease accounting and securitization transactions. Related financial reporting standards are identified and discussed, including the historical shift from a traditional control viewpoint to a primary beneficiary viewpoint for financial reporting for consolidation for SPEs (recently renamed Variable Interest Entities (VIEs) in U.S. Financial Accounting Interpretation 46R). The article also includes illustrative journal entries explaining SPE transactions from both the viewpoint of the creating company(s) and the SPE. Actual financial reporting examples and/or journal entries for SPEs created by Bank of America, General Motors Acceptance Corporation, Lucent Technologies and Alza Pharmaceuticals Corporation are also provided.

This study examines issues relating to the mandatory adoption of International Financial Reporting Standards (IFRS) by Greek listed companies. Initially, the impact of transition, as a result of differences between IFRS and Greek GAAP, on the first IFRS financial statements in 2005 is assessed. Then, a disclosure index is constructed, containing all the disclosure items mandated by the IFRS extant at the end of April 2006. Based on this research instrument, and two disclosure index methods, compliance with IFRS mandatory disclosures in their first year of implementation is examined. A review of disclosure theories, the features of the Greek financial reporting system, and considerations regarding the timing of the research are used as a basis for establishing a priori expectations and testing the potential factors explaining compliance with IFRS mandatory disclosures. Subsequently, any change in the value relevance of accounting information before and immediately after IFRS mandatory implementation is examined. Whether the reconciliation statements required by IFRS 1 provided value relevant information to investors is also explored. Finally, the valuation implications of IFRS mandatory disclosures are explored. The above analyses indicate the following. Greek listed companies’ financial statements were affected significantly by the adoption of IFRS. The average level of compliance with IFRS mandatory disclosures approximates to 80%. The impact on net income and shareholders’ equity, as a result of the transition to IFRS, as well as audit firm size, are significantly associated with the extent to which companies comply. No change in the value relevance of accounting information between 2004 and 2005 is identified. Reconciliation adjustments are incrementally value relevant and levels of mandatory disclosures do have valuation effects. Based on the findings of the above analyses, the study contributes to the relevant literature and discusses policy implications. It also concludes with suggestions for further research and recommendations on the methods for measuring compliance with IFRS mandatory disclosures.