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

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  • Navarro-García, Juan Carlos
  • Madrid-Guijarro, Antonia

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.

Suggested Citation

  • Navarro-García, Juan Carlos & Madrid-Guijarro, Antonia, 2016. "Real economic activity and accounting information in Spanish construction and real estate firms," Revista de Contabilidad - Spanish Accounting Review, Elsevier, vol. 19(1), pages 21-30.
    • Handle: RePEc:eee:spacre:v:19:y:2016:i:1:p:21-30
    DOI: 10.1016/j.rcsar.2014.10.002
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    References listed on IDEAS

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    Cited by:

    1. Tetyana Slyozko & Lyudmila Kurilo & Oleksandra Mazina, 2018. "The Unique Opportunities Of Accounting To Promote Transparency Of Economic Processes," Copernican Journal of Finance & Accounting, Uniwersytet Mikolaja Kopernika, vol. 7(4), pages 115-125.

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    More about this item

    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;
    All these keywords.

    JEL classification:

    • L74 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Construction
    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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