Differential financial reporting requirements: Developing a framework using a Multi-Actor Multi-Criteria Analysis

The differential reporting debate is mainly based on the idea that different types of entities should be subject to different financial reporting requirements. Various alternatives of differential reporting regulations already exist or have been suggested, but the continuous flow of debates and proposals by standard setters and regulators illustrates the lack of conclusive results. Most of the proposed alternatives have the intention to relieve the cost of compliance. However, the needs and benefits of financial statement users of different categories of entities are usually forgotten in the differential reporting debate. This paper aims at developing a first step towards a framework of best practices with regard to differential financial reporting regimes for different types of companies, based upon an in-depth identification and analysis of the various internal and external stakeholders and their actual needs. For this, we present an evaluation tool, called the Multi-Actor Multi-Criteria Analysis (MAMCA), that will take into account all stakeholder groups and their user needs and constraints into account. The outcome of the framework can be useful for regulators who look for economic guidance on how to implement differential financial reporting rules.