Katerina Hellström

There are many references in literature to customer satisfaction and related non-financial measures driving the financial performance of a company. Here we report results of analysis in the North-European financial sector, mainly banking. Based on proposed financial and customer perceived KPIs operational measures are devised and measured for the studied corporation on different levels from global-corporate to individual branches. In addition, possible extensions to other industries of this relationship are studied and briefly reported. The analysis is based on panel approach where cross-section and time-series observations are studied for major actors. The Arellano-Bond estimation technique is used throughout. 

This dissertation documents the quality of financial accounting information in a transition economy, the Czech Republic. High quality accounting information decreases the risks for investors, promotes investment activities and increases the ability of companies to raise funds at a reasonable cost of capital. Countries with high quality accounting information have a comparative advantage in attracting financial capital. Transition economies - i.e. countries switching from centrally planned to market economies - are typically in need of capital. Therefore a new accounting regulation had to be developed that would satisfy the needs of new private investors. The quality of financial accounting information depends on accounting quality (an outcome of applied accounting principles) and disclosure quality (an outcome of the amount and characteristics of information provided in the financial statements). Accounting quality is measured as the value relevance of accounting numbers and certain attributes of earnings which promote the value relevance. Disclosure quality is measured in terms of mandatory disclosure requirements, actual disclosures of companies (i.e. the level of compliance with legislation) and additional information provided voluntarily by the companies. Sweden is used as a benchmark for well-developed market economy and the quality of financial accounting information in the Czech Republic is systematically compared to the quality of Swedish financial accounting information throughout the dissertation. The results show that both accounting and disclosure quality in the Czech Republic were inferior in the beginning of the transition period. Over time, the value relevance of accounting numbers has however improved. The change in the value relevance may be attributed in particular to improvements in disclosure quality. The key factors behind the development were improved accounting legislation and control mechanisms, accompanied by changes in the business climate including higher sophistication of both the producers and users of the financial information.

The paper investigates the value relevance of accounting information in the Czech Republic in 1994-2001. Value relevance is understood as the ability of financial statement information to capture or summarise information that affects share values and empirically tested as a statistical association between market values and accounting values. The objective of the study is to investigate the validity of the value relevance methodology by finding an accounting setting where the results of value relevance tests might be predicted unambiguously. If the results of these tests confirm the predicted results, the validity of the value relevance methodology might be assumed. A transition economy represented by the Czech Republic provides such an institutional and accounting setting. It might be assumed that value relevance of accounting information is lower in a transitional economy than in a well-developed market economy. It can also be assumed that the value relevance increases over time as a result of the progress in transition. The results of the study confirm these predicted results and give thus supportive evidence of the validity of the value relevance methodology.