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ORIGINAL PAPER
Determinants of Opacity in the Financial Reporting of Polish Micro- and Small Enterprises
1
University of Szczecin, Institute of Economics and Finance
Submission date: 2025-03-28
Final revision date: 2025-10-23
Acceptance date: 2025-11-17
Publication date: 2025-12-29
JoMS 2025;64(4):590-612
KEYWORDS
accounting policyfinancial reportingmicro and small companiesaccounting simplificationfinancing decisions
TOPICS
ABSTRACT
Objectives:
This article aims to assess the relationship between financing providers for micro and small companies (MSCs) and the use of the reduced financial reporting regime, which obscures the assessment of their financial situation. The main research question is: What are the determinants of the decision to abbreviate the financial statements of micro and small companies?
Material and methods:
Based on the Orbis database and financial statements extracted directly from the National Register of Companies (KRS) in Poland, logistic regression was employed to determine the relationship between different sources of funding and stakeholders and the use of abbreviated financial statements.
Results:
According to the findings, less than half of eligible companies use abbreviated financial statements in Poland, which is much less than expected and compared to other countries. Abbreviated financial statements do not seem as attractive as they might seem on the basis of the preamble to the Accounting Directive, that repeats the goals of many EU policies. Furthermore, abbreviated financial statements are correlated with legal form (small and micro enterprises) and financial debt (micro enterprises only). The more complex legal form and use of financial debt reduces the likelihood of using abbreviated financial statements. Thus, the use of abbreviated financial statements can be challenging for micro-entities seeking external debt financing.
Conclusions:
Two specific directions of the EU's long-term economic policies are in conflict with each other, which creates a need for specific measures to counteract this conflict. We shall recognise the negative consequences and limitations of simplifying the financial reporting of these entities, especially since the practical benefits associated with it are not in fact significant.
This article aims to assess the relationship between financing providers for micro and small companies (MSCs) and the use of the reduced financial reporting regime, which obscures the assessment of their financial situation. The main research question is: What are the determinants of the decision to abbreviate the financial statements of micro and small companies?
Material and methods:
Based on the Orbis database and financial statements extracted directly from the National Register of Companies (KRS) in Poland, logistic regression was employed to determine the relationship between different sources of funding and stakeholders and the use of abbreviated financial statements.
Results:
According to the findings, less than half of eligible companies use abbreviated financial statements in Poland, which is much less than expected and compared to other countries. Abbreviated financial statements do not seem as attractive as they might seem on the basis of the preamble to the Accounting Directive, that repeats the goals of many EU policies. Furthermore, abbreviated financial statements are correlated with legal form (small and micro enterprises) and financial debt (micro enterprises only). The more complex legal form and use of financial debt reduces the likelihood of using abbreviated financial statements. Thus, the use of abbreviated financial statements can be challenging for micro-entities seeking external debt financing.
Conclusions:
Two specific directions of the EU's long-term economic policies are in conflict with each other, which creates a need for specific measures to counteract this conflict. We shall recognise the negative consequences and limitations of simplifying the financial reporting of these entities, especially since the practical benefits associated with it are not in fact significant.
License
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| eISSN: | 2391-789X |
| ISSN: | 1734-2031 |
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