Abstract
In a society depending on real time information, corporate disclosure is crucial for the capital market efficiency. The more disclosures a company makes, the more transparent becomes the information to investors, the lower becomes the information asymmetry and more credible the firms will be for the market. The purpose of this study is to investigate the association between the voluntary disclosure level in annual reports and firm characteristics of more active 50 Egyptian companies listed on the Egyptian Stock Exchange of the non-financial sector during the period 2007-2010. The firm characteristics used in the study are: firm size, auditor size, profitability, and firm’s age. A disclosure checklist consisting of 60 voluntary items of information is developed and statistical analysis is performed using multiple regression analysis. The results of univariate and multivariate analyses indicated that firm size and profitability have significant positive association with voluntary disclosure level in annual reports. On the other hand, auditor size and firm’s age do not have any significant association with voluntary disclosure level. However, this paper has contributed to the academic literature that firms in the Middle East provide voluntary corporate information which builds a confidence to the investors in general. Keywords: Firm Characteristics; Annual reports; Voluntary Disclosure; Egypt
Highlights
Voluntary disclosure in the annual reports and in other information media has been one of the rapidly growing research areas in the accounting field
This paper reports on the level of voluntary disclosure of a sample of non-financial Egyptian firms listed on the Egyptian Stock Exchange over the period 2007-2010 and, investigates the association between the level of disclosure and firm-specific characteristics
The low disclosure level most likely relates to the fact that this type of information is voluntary in nature, and no existing disciplines set out by the authoritative accounting and reporting bodies in Egypt require public firms to display such information
Summary
Voluntary disclosure in the annual reports and in other information media has been one of the rapidly growing research areas in the accounting field. Research studies about these markets are needed and are vital in improving the weak transparency and disclosure situation by attracting the attention of regulatory bodies and firm managers (Alsaeed, 2006). What is nowadays disclosed on a voluntary basis is likely to be included in the foundations of standardization and the future regulations This could be achieved as a response to the needs of the Egyptian external users of the annual reports since their need for information is constantly growing. The relevance of this paper is based on several reasons It contributes to the recent literature on the information transparency and accountability. The study addresses voluntary disclosure practices over the period of considerable changes in the business environment in general and the capital market in particular.
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