This paper provides new empirical evidence on the impact of formal business networking on small and medium-sized enterprise (SME) growth. Using a large, unbalanced panel data set of Flemish SMEs over the period 1992-2008, we examine whether participation in a government-supported program aimed at providing small business managers with structured formal networking contacts is associated with SME growth. Our results suggest that formal business networking is significantly positively correlated with net asset and added value growth

SUMMARY As a result of legal and regulatory requirements, audit firms in certain jurisdictions have recently started issuing transparency reports containing information on audit firm governance. In this study we investigate whether audit firm governance disclosure is associated with actual audit quality. Based on a sample of transparency reports of 103 audit firms in a number of EU countries, we find that there is variation in the extent and type of governance disclosures across audit firms. We, however, do not find an association with actual audit quality, apart from a weak association with an audit firm's statement on the effectiveness of its internal quality control system. Data Availability: All data are available from public sources indicated in the study.

This study explores a large and detailed dataset of financial statements of Belgian small and medium-sized enterprises (SMEs) over the 1997–2010 period. Using accruals quality as a proxy for the quality of SMEs’ financial reports, we find that the quality of SMEs’ financial statements is negatively related to those companies’ effective interest cost. This result is also highly economically significant. The findings in this paper are consistent with the idea that earnings are important for creditors in predicting SMEs’ reimbursement capacity (i.e., future cash flows) and that less estimation error in accruals enhances earnings’ ability to predict future cash flows. We deliver evidence of an important economic benefit of financial reporting for SMEs, to wit, the potential to reduce information asymmetry between SMEs and their creditors through higher-quality financial reporting

Manuscript Type: Empirical Research Question/Issue: In this paper, we examine the determinants of the level of disclosure on corporate governance practices among European listed companies in the time period preceding the adoption of the European Union recommendations and Action Plan. Research Findings/Results: Using ratings on corporate governance disclosure issued by an independent rating agency we find that -ceteris paribus -the level of disclosure: (1) is lower for companies with higher ownership concentration; (2) is higher for companies from common-law countries; and (3) increases with the level of working capital accruals. Theoretical Implications: The results of the study support theoretical arguments that companies disclose corporate governance information in order to reduce information asymmetry and agency costs stemming from the separation between ownership and control, and to improve investor confidence in the reported accounting information. The study suggests various avenues for future research on corporate governance. Practical Implications: To policy makers and practitioners, the results suggest that a mandatory corporate governance disclosure requirement is abundant, and perhaps could even be inefficient. The results also indicate which types of companies can be expected to be least willing to comply with recent corporate governance disclosure requirements, and thus will need extra monitoring.

Francis et al. (1999) and Becker et al. (1998) report evidence that audit quality acts as a constraint on both income-increasing and income-decreasing earnings management in public firms. These results raise several interesting questions. First, are incentives for and constraints on earnings management independent of whether earnings are above or below target? Second, does audit quality also restrain earnings management in private firms as it does in public firms? Third, does public ownership itself act as a constraint on earnings management? One could argue that, relative to private ownership, public ownership increases the scrutiny of a firm's financial statements which may in tum restrain a firm's earningsmanagement behavior.Accordingly, we study publicly available financial statements of a matched sample of public and private Belgian firms. Following Francis et al. 1999, we use discretionary accruals as a measure of earnings management. One finding is that audit quality and public ownership act as constraints on income-decreasing earnings management. We also find that, to a large extent, public ownership and auditor type are substitutes: for example, a firm that is both public and big-6-audited typically does not show more restraint in earnings management than a firm that has only one of these characteristics. Lastly, we do not have any evidence that audit quality and public ownership constrain income-increasing earnings management.Thus, our study contributes to the literatures on audit quality differentiation and especially earnings management. First, we provide supportive evidence of audit quality differentiation between Big 6 and non-Big 6 auditors in the private clients segment of the audit market. Second, we provide evidence on differences in the level of discretionary accruals between public and private firms.