Frontiers in European Entrepreneurship Research
Frontiers in European Entrepreneurship series
Edited by Friederike Welter, Robert Blackburn, Elisabet Ljunggren and Bjørn Willy Åmo
Chapter 4: The bearable lightness of the administrative burden: UK financial reporting regulation and small company performance
Successive United Kingdom (UK) governments have, over three decades, sought to reduce the ‘administrative burden’ of regulation on small enterprises (DTI 1985; HM Treasury 2005; HM Government 2012). One source, derived from the UK government’s own impact assessments, recently suggested that new legislation generated an administrative bur- den for UK businesses of approximately £112 billion between 1998 and 2010 (IoD 2011). The UK government has implemented a number of initiatives intended to reduce the regulatory administrative burden on businesses, particularly for micro and small firms (e.g. Better Regulation Executive 2010), as part of a policy agenda to make the UK one of the best places in Europe to start, finance and grow a business (HM Treasury/BIS 2011). Other commentators, conversely, have insisted on the ‘unbearable lightness’ of regulatory costs (Ackerman 2006), suggest- ing that there is no significant trade-off between prosperity and regu- lation. Indeed, the UK regularly ranks highly in World Bank indices of the easiest countries in the world to do business: 7th of 185 countries in 2012 (World Bank 2012). This study explores how regulation governing the public disclosure of financial information – allowing small companies to file abbreviated accounts in place of full accounts at Companies House, the UK public registry – influences business performance, in the context of the new Accounting Directive (2012/6/EU). The Directive permits member states to exempt ‘micro-entities’ from ‘certain obligations that may impose on them an unnecessarily onerous administrative burden’ (European Com- mission 2012: para. 5).
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