The aim of this work is to determine whether the accounting information provided by construction and real estate firms in Spain reflects the real economic activity, during upswings and downturns. A relationship is found between economic conditions and financial reporting in a continental European country such as Spain. Although there is a relationship between real housing price growth and financial accounting measures, real estate companies seem to show an artificial position, since they only present a relationship with Return on Assets (ROA) based on low quality income (accruals). Therefore, a different financial position influences a different behaviour in these two similar sectors. In fact, some signs alerting of possible risk in real estate firms are shown.
Navarro-García, J. C., & Madrid-Guijarro, A. (2016). Real economic activity and accounting information in Spanish construction and real estate firms. Revista de Contabilidad, 19(1), 21–30. https://doi.org/10.1016/j.rcsar.2014.10.002