Author(s)

Marco Sorrentino¹, Margherita Smarra²

¹Department of Law and Economic Sciences, Pegaso Telematic University, Naples, Italy.
²Department of Economics, Management and Institutions, University of Naples Federico II, Naples, Italy.

In the last five years, the vocabulary of financial reporting has been enriched by a new specific term: “business model”. However, as the expression is rather equivocal, it is not still possible to find an unanimously shared meaning of the term in the literature. Because of the relatively recent application of the term “business model” in financial reporting, the investigation of its proper meaning is still an uninflated topic of research. Specific purpose of this paper is trying to contribute in finding a proper definition of this term when used in financial reporting (if any). In this sense, after having reviewed the main literature on “business model” definition we have analyzed the parts of the comment letters on the IASB’s Discussion Paper 2013/1—titled “Review of the Conceptual Framework for Financial Reporting”—which deal with “business model” definition. In particular, the questions whose answers have been specifically investigated are the following: 1) Should the IASB define “business model”? Why or why not? 2) If you think that “business model” should be defined, how would you define it? However, considering the contrasting definitions found both in the literature and in the comment letters, it is not still possible to get a widely accepted meaning of the term “business model” in financial reporting. For these reasons, at this stage of research, the authors completely agree with the thought of Singleton-Green that asserts, “Defining or agreeing a definition of the term “business model” will not advance our understanding of the financial reporting issues”.

Business Model, Financial Reporting, IASB

Sorrentino, M. and Smarra, M. (2015) The Term “Business Model” in Financial Reporting: Does It Need a Proper Definition?. Open Journal of Accounting, 4, 11-22. doi: 10.4236/ojacct.2015.42002.