Real economic activity and accounting information in Spanish construction and real estate firms

Juan Carlos Navarro-García and Antonia Madrid-Guijarro

Revista de Contabilidad - Spanish Accounting Review, 2016, vol. 19, issue 1, 21-30

Abstract: The aim of this work is to determine whether the accounting information provided by construction and real estate firms in Spain reflects the real economic activity, during upswings and downturns. A relationship is found between economic conditions and financial reporting in a continental European country such as Spain. Although there is a relationship between real housing price growth and financial accounting measures, real estate companies seem to show an artificial position, since they only present a relationship with Return on Assets (ROA) based on low quality income (accruals). Therefore, a different financial position influences a different behaviour in these two similar sectors. In fact, some signs alerting of possible risk in real estate firms are shown.

Keywords: Real economic activity; GDP; Housing prices; Earnings management; Construction and real estate firms; Actividad económica real; PIB; Precios de la vivienda; Gestión del resultado; Empresas inmobiliarias y de la construcción (search for similar items in EconPapers)
JEL-codes: E32 L74 L85 M41 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:spacre:v:19:y:2016:i:1:p:21-30

DOI: 10.1016/j.rcsar.2014.10.002

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