The early adoption of consolidated accounting in Spain

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Abstract
Consolidated accounting for corporations in Spain was rare before the Seventh European Directive, adopted by the European Union in 1983, and only became compulsory in 1991. During the intervening years a number of firms elected to adopt consolidated accounting even though they were not required to do so. These circumstances provide a useful insight into the early adoption of accounting practices as, in contrast with most previous studies of early adoption, (a) many firms adopted the accounting techniques well in advance of the required date, (b) consolidation makes a substantial impact on reported financial statements, and (c) the effect of consolidation can be beneficial or adverse. We find that those firms which adopted consolidated accounting early reported a significantly better change in reported performance at the time of adoption than those firms which only consolidated when required to do so. Firms that are subject to government regulation also tended to adopt early but the impact of consolidation on reported performance was not beneficial for regulated early adopters.

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