The Bank of Italy recently published a study examining the impact of reducing administrative burdens for micro-enterprises (the so-called "micro balance sheet") on corporate performance.
Quantitative information contained in corporate financial statements represents a crucial tool for investors and banking institutions. This data enables the adoption of objective criteria in evaluating corporate performance and creditworthiness.
A central aspect of the corporate reporting debate concerns the inclusion of non-financial information within financial statements. These additional data - which may include economic forecasts, statements, and commentary from the board of directors - have the potential to deliver significant benefits, but are not without their challenges.
On one hand, greater transparency in corporate information could improve the overall efficiency of financial markets. This translates into greater liquidity, a reduction in the cost of capital, and more targeted and informed managerial decision-making. On the other hand, the costs associated with collecting, managing, and disclosing this information - both direct and indirect - can represent a significant obstacle, especially for smaller enterprises.
These considerations highlight the need for a balance between transparency and the sustainability of reporting burdens, particularly in light of the implementation of Legislative Decree No. 139 of 2015, which allows micro-enterprises to prepare the so-called "micro balance sheet" that does not require the preparation of the Nota Integrativa.
The Study
The aforementioned reform came into effect starting from the 2016 financial year, and was therefore based on financial statement data from 2014 and 2015. The investigation was conducted using data from CERVED, the Chambers of Commerce (Infocamere), the National Social Security Institute (INPS), and the Italian Central Credit Register. The analysis focused on independent limited liability companies in the private non-financial sector from 2013 to 2019 that had filed financial statements, reported non-negative value added, and had no non-performing loans. Furthermore, all observations that, in a given year, exceeded at least one of the thresholds for the abbreviated balance sheet were excluded from the sample. The defined scope allowed for the identification of several effects attributable to the simplification of reporting obligations:
- The adoption of the "micro balance sheet" did not show significant effects on corporate cost structures.
- The information contained in non-financial reporting is used by credit institutions in assessing creditworthiness; consequently, its reduction translates into more difficult access to credit for those micro-enterprises that cannot rely on an established reputation within the credit system.
- The removal of such information can lead to the termination of existing banking relationships, due to an increase in the perceived risk by financial intermediaries.
The results further highlight that the choice not to disclose information is more likely for firms with a more established reputation and less pressing transparency demands from other shareholders. On the other hand, the size of the credit institution also plays a determining role in lending decisions: smaller banks in Italy are characterized, in fact, by a more intensive use of "soft" information in assessing a firm's creditworthiness.
Conclusions
The conducted analysis highlights how Legislative Decree No. 139 of 2015, although aimed at reducing the informational burden for businesses, did not produce significant effects on operating costs. Instead, the main impact of the regulation was concentrated on the financial dimension, limiting the capacity to access credit and, consequently, undermining growth potential. Therefore, the choice to voluntarily provide more comprehensive non-financial disclosure configures itself as a strategic decision for the future of the enterprise itself.