Entrepreneurial Business and Society
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Entrepreneurial Business and Society

Frontiers in European Entrepreneurship Research

Edited by Friederike Welter, Robert Blackburn, Elisabet Ljunggren and Bjørn Willy Åmo

Entrepreneurial Business and Society summarizes contemporary research in the field of entrepreneurship and small business and explores the interplay between the entrepreneur, the entrepreneurial firm and society.
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Chapter 4: The bearable lightness of the administrative burden: UK financial reporting regulation and small company performance

Frontiers in European Entrepreneurship Research

John Kitching, Eva Kašperová and Jill Collis


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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