Accounting and finance for business 2024 : towards sustainability : 14th international scientific conference programme and abstracts, 14-15th November, 2024

The empirical analysis on the effectiveness of the subsidies to farms following the Common Agricultural Policy (CAP) was carried out for this presentation. The aim of this analysis was to explore to what an extent agribusiness in Lithuania are supported by the government and the differences in the effectiveness of this support among the farms. The study evaluated the extent to which current subsidies increased the revenue generated from core business operations, the impact of current subsidies on profitability, and the extent to which investment subsidies have affected the investment capacity of farms, focusing on the differences among them regarding their size and farming conditions. To achieve these goals three indicators such as the nominal protection coefficient (NPC), return on assets (ROA) and the share of subsidies for investments in gross capital formation were respectively used. The effect of subsidies is measured as the difference between the values of each indicator calculated "with subsidies" (reflecting the actual situation) and "without subsidies" (simulation). Aggregated data from the Lithuanian Farm accountancy data network (FADN) survey in 2020- 2022 were used for the analysis.

It was found that current subsidies increased farm total revenue generated from market transactions the most in medium-sized farms (45-50% in farms from 20 to 50 ha), and least in small farms (up to 10 ha) and large farms from 150 ha (10% and 14%, respectively). In addition, this effect is significantly higher in organic farms and farms located in areas with natural or other specific constraints (90% and 45%, respectively). In terms of the impact on the profitability, current subsidies increased the ROA by 10-15 percentage points in medium-sized farms (20-100 ha) and in organic farms as well. Meanwhile, this impact is much smaller on farms up to 10 ha and large on farms from 150 ha (pp. +3 and +6, respectively). Farms with 10-30 ha had the highest contribution of investment subsidies to gross capital formation (about 65% of total investment), as well as very small farms (up to 50%), while in large farms this indicator reached only about 2 %. Thus, the effectiveness of CAP support varies greatly between farms, which means a distortion of the competitive conditions from an economic point of view.

Latvia has made significant strides in aligning its public finance with sustainability principles in recent years. Latvia is implementing the UN Sustainable Development Goals by integrating them into the Sustainable Development Strategy of Latvia 2030 and National Development Plan for 2021-2027. Strategy 2030 identifies key focus areas such as science and innovation, modernisation of governance, and reducing inequalities. This research explores the potential of performance-based budgeting (PBB) to link sustainability policy to future finance and accounting practices in Latvia. PBB is an approach that seeks to enhance decision-making by connecting budget allocations to performance outcomes. The main challenge is the integration of sustainability policy objectives into budgetary processes, ensuring the monitoring and evaluation of performance metrics related to the expenditures and the reporting system ensuring accountability. Enhancing transparency and accountability by implementing the PBB provides a framework for tracking and reporting on the outcomes of budgetary decisions. The changes in the budget legislation of Latvia and OECD countries were also studied using retrospective and comparative analysis. Based on the current experience of OECD countries, recommendations for potential reforms included the creation of the linkage between sustainable national development goals and budget strategy documents based on medium-term timeframes and improving communication between the government and civil society. The practical significance of the research is related to creating a budget reform programme and appropriate reporting and monitoring system for Latvian public sector organisations.

E-commerce, one of the fastest-growing business sectors both in Lithuania and globally, poses complex accounting and tax challenges. It is important to identify which digital technologies are or can be applied to address these challenges and to determine which areas require improvement. This study examines the challenges faced in e-commerce accounting and how digital technologies can help solve them in Lithuania. The study applies methods such as related scientific literature analysis, interviews, and case studies. Interviews with accounting companies highlighted the practical challenges of e-commerce accounting in Lithuania. A case study of Lithuanian accounting software examined which digital solutions are applied to tackle e-commerce accounting challenges. The study revealed that the main accounting challenges in Lithuania’s ecommerce are related to the different value-added tax (VAT) rates when trading in various countries, real-time inventory tracking, revenue recognition in multichannel sales, accounting for various payment methods and currencies, and integrating and aligning different e-commerce platforms. Accounting software in Lithuania provides digital solutions like application programming interface (API) solutions, synchronization of data with trading portals, and importing large volumes of reports. However, most existing solutions are expensive and require customization, limiting their accessibility to smaller businesses. In Lithuania's e-commerce sector, more accessible and universal solutions must be developed. There is a need for standardized reports from trading platforms, improved capabilities for data import and exchange, and the integration of artificial intelligence (AI) for accounting data processing. These solutions would help ensure more accurate and efficient accounting, positively impacting business process efficiency and overall competitiveness.

Rapid development of information technologies results in new challenges regarding the accountant profession—especially the ways digitalisation affects accountants’ tasks and roles. The purpose of this study is to assess how digitalisation has changed the role of the accountant and to explain how higher education can assist in providing new abilities. A survey in Lithuania was performed. In total, 32 persons working in the accounting field were surveyed. Analysis of results includes a t-test, factorised boxplot analysis, and regression analysis. The findings revealed that there is evidence for a shift in the accounting profession—most notably, accountants require additional skills, especially in areas such as registration of transactions and cost allocation using automated processes and artificial intelligence for scanning mistakes and avoiding repetitive tasks. Thus, additional knowledge regarding automation and artificial intelligence is required to maintain efficiency and competitiveness in the labour market. Another important finding is that respondents show high interest in learning new knowledge regarding automation and artificial intelligence. The results have significant implications, as the higher education system could provide more means to provide, improve, or refresh knowledge regarding automating processes, analysing data, and using artificial tools to cope with the challenges associated with digitalisation in accounting activities.

Green bond issue is a signal to a stock market that is interpreted by shareholders differently: as positive for eco-friendly investors and as negative for traditional investors. The study aims to assess the short-term stock market reaction to the announcement of green bond issues in Nordic public companies and to determine whether the characteristics of green bond issues and issuers are significant determinants of stock cumulative abnormal return (CAR). Total sample is 197 green bond issues during 2017–2024. Sweden has the highest number of green bond issues (60.9%). Denmark and Finland have a very similar share of 20.3% and 18.8% respectively. Stock market reaction is assessed by applying an event study methodology. CAR dependence on characteristics of green bond issues and issuers is determined using a heteroskedasticity-corrected regression model. The study revealed a negative stock market reaction to the announcement of green bond issues. Such reaction may not only be due to increased capital expenditures and financial risk, but also to the shift of investments from stocks to green bonds as the majority of green bond were issued during the COVID-19 pandemic and the Russian-Ukrainian war. Maturity, coupon rate, cancellation right, and issue amount are statistically significant determinants of CAR only for the companies operating in the industrial, utility, and telecommunication sectors and only in the shortest event window. Coupon rate and cancellation right are statistically significant in the longest event window. Issue amount is statistically significant in the longest event window, coupon rate and cancellation right – in the shortest and medium event windows analysing the CAR in banks and financial institutions. We also found different issuers’ characteristics as determinants of CAR in these two categories of companies. The findings support short-term investors’ behavior based on the signaling theory.

In recent years, there has been a growing emphasis among companies on corporate social responsibility (CSR) and its disclosure. They apply various standards for this purpose. The CSR disclosure practice differs across countries with some companies openly declaring CSR reporting standards, while others do not. Stakeholders need insights into the traits of companies that choose to disclose CSR reporting standards. This research seeks to identify the factors that influence public companies in the Baltic region to declare CSR reporting standards. The study measures the decision of Baltic public companies to declare CSR reporting standards. Data on these decisions is gathered through a content analysis of non-financial reports of companies. Independent variables include company visibility, financial performance, and market expectations, with the data sourced from the Bloomberg database. Logistic regression models are employed for the analysis. The results of the study showed that only half of the companies disclosed their CSR reporting standards. Estonian companies preferred GRI standards, while Lithuanian companies favoured both GRI and UNGC. Due to the limited sample size of Latvian public companies, with only two included in the analysis, drawing meaningful conclusions regarding their CSR reporting preferences is not feasible. Larger companies, those in "heavy industry," and companies with higher earnings per share but lower return on assets and capital expenditures were more likely to declare CSR standards. Market expectations had no influence on the choice of CSR standards. However, companies using GRI standards shared similar traits with age and market expectations also playing a role – particularly younger and higher market-value. These findings align with legitimacy, stakeholder, and signalling theories, and provide several implications. Investors are encouraged to prioritize transparency in CSR reporting, regulators should consider standard usage trends, policymakers should address CSR disclosure in smaller companies, and industry-specific factors could prompt managers to reconsider their approach to CSR reporting.

Global financial markets are affected by economic crises, financial instability, and geopolitical unrest, which also affect strategic choices of portfolio investors. The aim of research is to assess the impact of uncertainties on the interconnectivity between the green bond and conventional financial markets before and after the Russian-Ukrainian war. Time series analysis is applied for the study: vector autoregression (VAR) models to assess the overall interconnectivity between financial markets and dynamic model averaging (DMA) to assess the impact of uncertainties. The findings revealed that the overall spillover index between the analysed financial markets increased during the war. The green bond market also became a transmitter of shocks. With the outbreak of the war, uncertainty grew and had a significant impact on overall spillover; however, the geopolitical risk and volatility (VIX) indices had a negative impact on interconnectivity. The study provides more insights into the interdependence of green and conventional financial markets during the crisis periods, the impact of uncertainties on this interdependence, and how these relationships change during the crisis. The results have significant implications for global investment choices and risk management for investors holding significant positions in the green bond market.

The present research aimed to test the impact of the accounting and tax environment on international trade using the gravity model in the case of Lithuania. Various researches discuss that the accounting and taxation environment is important for business development in a country. Also, international trade is growing in a global world and here business faces some risks when searching for new markets to export goods. Wrong decisions in international trade can lead to a lost of financial resources for business. For this actuality, we wanted to find out what is the impact of the accounting and taxation environment on international trade. The methodology we have used includes the gravity model, which allows us to measure different factors that influence international trade. In the present research, we use traditional variables such as gross domestic products (GDP), population size, distance, and membership in the European Union (EU), as well as specific variables such as – application of international financial reporting standards (IFRS), sustainable development goals (SDG) index, corporate tax rate, and international trade tax. Our research is based on data for 2018–2022 collected from the Lithuanian official statistics, the World Bank, the Centre d'Études Prospectives et d'Informations Internationales (CEPII), the Tax Foundation, the IFRS Foundation, and the Sustainable Development Report portal. The main results of the research methodology developed highlight several important aspects. First, from the perspective of accounting and tax discipline, we can discuss how important the accounting and taxation regulary environment in countries is for global business development. Second, it allows companies to analyse and select the right market to export their products and reduce financial risk. Third, it provides insights for policymakers who seek to increase international trade by creating more attractive country environments for business through accounting and tax regulation. The present research opens new discussions in this area for future research.

The Sustainable Development Goals (SDGs) represent a global standard of sustainable development priorities and goals at economic, social, and environmental levels. Public Private Partnerships (PPP) in projects are increasingly gaining acceptance as an alternative to the traditional approaches of project funding based on public sources. PPP projects contribute to the implementation of the SDGs. Objective answers about investment alternatives can only be obtained by evaluating them from several perspectives and using several indicators rather than a single dominant one, i.e., by applying multi-criteria evaluation methods. The research problem stems from the diversity of impacts of PPP projects, the complexity of their identification, and the need for their comprehensive assessment. Research aim is to develop a methodology for assessment of PPP projects in the light of the SDGs and to empirically test this methodology. Research methods: synthesis of theoretical insights, situation modelling, logical analysis, case study, multi-criteria decision technique SAW (Simple Additive Weighting). The main outcome of the research is the development of a methodology for the assessment of PPP projects in relation to the implementation of the SDGs, which includes four main steps: analysing the objectives and expected outcomes of the projects under assessment; identifying the impact of the project on the implementation of the SDGs; determining the significance of the impact of the project on the implementation of the SDGs; and combining the assessment indicators into a single aggregated indicator. Based on the developed methodology, an empirical study was conducted to assess few PPP investment ideas and to select the most efficient investment option in terms of sustainability.