Disclosure Compliance Research Articles

Implementation of Good Corporate Governance and Voluntary Disclosure Compliance: 100 Compass Index Companies Listed Indonesian Stock Exchange (IDX) 2015-2016

The purpose of this study is to discuss the role of the company's 100 compass indexed in developing the best practices of corporate governance on voluntary disclosure. Based on the annual financial statements of 70 companies listed on the Indonesia Stock Exchange (IDX) for 2015-2016, the results show that the average voluntary disclosure in the company's annual report of 100 to 2015 composite protected futures is 76.73%. This value indicates that the company indexed 100 compasses on average can meet 21 items of 28 voluntary disclosure items. The percentage of unsatisfactory disclosure implies that there are several factors that may prevent the company from disclosing some sensitive information. The results of the study show that institutional ownership has a positive effect on voluntary disclosure, while for the proportion of boards of commissioners with accounting or business skills, and the proportion of audit committees with accounting or business skills has a significant negative effect on voluntary disclosure and other variables, ie the proportion of independent board of commissioners, meetings of the board of commissioners, the frequency of audit committee meetings and the proportion of independent audit committees have no effect on voluntary disclosure.

The compliance of disclosure with AAOIFI financial accounting standards

PurposeThis paper aims to examine the compliance of disclosure with the financial accounting standards of the Accounting and Auditing Organisation for Islamic Financial Institutions’ (AAOIFI) related to Islamic financing products by Islamic banks in Bahrain and Qatar.Design/methodology/approachThe study measures compliance using disclosure indexes. The disclosure indexes include the three financial accounting standards of Murabaha, Mudaraba and Musharaka. The data are collected from the annual reports of 24 Islamic banks in Bahrain and Qatar over a period of 2012-2015.FindingsThe paper found that Islamic banks in Bahrain and Qatar comply with AAOIFI financial accounting standards related to Murabaha, Mudaraba and Musharaka. However, there was a level of non-compliance in both countries. In addition, it found that the extent of compliance had increased over the 2012-2015 period. Also, the Murabaha standard had the highest mean of compliance. Moreover, the results showed that the Islamic banks in Qatar tend to have more compliance of overall Murabaha and Mudaraba disclosures compared to the Islamic banks in Bahrain.Research limitations/implicationsThe findings are preliminary and highlight that the issue is of high interest to Islamic banks and AAOIFI. Hence, it requires a detailed follow-up to form a complete picture that would assist AAOIFI and regulators gear their policies toward better quality disclosure by Islamic financial institutions. Even though the findings are encouraging, future research is recommended to enforce compliance with the AAOIFI financial accounting standards.Originality/valueThis is a pioneer empirical study that focuses on the level and trend of compliance with AAOIFI financial accounting standards related to the Islamic financing products of Murabaha, Mudaraba and Musharaka standards, especially in Qatar. Additionally, it is the first study comparing between the only two Gulf Cooperation Council (GCC) countries, i.e. Bahrain and Qatar, that mandatory apply the AAOIFI standards.

The effect of corruption and culture on mandatory disclosure compliance levels: Goodwill reporting in Europe

While responding to calls for research and regulatory concerns regarding the influence of country level characteristics on the completeness and quality of financial statements, we examine the simultaneous influences of corruption and culture on levels of compliance with mandatory disclosure requirements. We use a panel dataset of European companies, for 2008–2011, and measure compliance with IFRS goodwill disclosure requirements utilising a disclosure index. Corruption is measured using the Corruption Perception Index (CPI) and Schwartz (2008) bipolar cultural dimensions are used as measures of culture. We find that compliance levels vary significantly across sample firms, countries and over time. The level of corruption and two of the three cultural dimensions (Hierarchy and Mastery) are significantly related to these levels of compliance. These findings also hold for the changes in compliance levels over time. On that basis, the paper makes original contributions to our understanding of determinants of compliance levels with IFRS mandatory disclosure requirements.

COMPLIANCE WITH IFRS REQUIRED DISCLOSURE AND ANALYSTS’ FORECAST ERRORS: EVIDENCE FROM BRAZIL

We analyze the relationship between analysts' earnings forecast errors and Brazilian listed firms’ compliance with International Financial Reporting Standards (IFRS) required disclosure. Through analysis of a panel data, we examine whether the variance in the Brazilian firms’ disclosure compliance levels in the Notes to Financial Statements for 2010 and 2012 affects analysts’ earnings forecast errors for 2011 and 2013, respectively, finding a significant negative relationship between these variables. By performing a compliance level analysis per firm, our study considers whether and to what extent firms effectively disclose as required by IFRS (as “IFRS serious adopters”), distinguishing them from firms that mere formally adopt IFRS (as “IFRS label adopters”), without effectively complying with it. Following other studies, we use four alternative models to measure the disclosure compliance level per firm, and we do not find significant improvement in the firms’ disclosure levels from 2010 to 2012, except if we use the most tolerant model. By this approach, our research contributes to clarify the impact of IFRS adoption on analysts’ forecast accuracy, as other studies that use only binary variables (analysts’ forecasts before and after IFRS adoption) have found contradictory results. Our findings confirm other studies on the international accounting convergence in other countries, emphasizing that compliance is at least as important as the simply formal IFRS adoption. This corroborates the relevance of enforcement mechanisms to induce firms to better comply with IFRS, thus to better attain the economic benefits expected from its adoption.

Civil Liability and Mandatory Disclosure

This paper explores the appropriate system of civil liability for mandatory securities disclosure violations by established, publicly traded issuers. The U.S. system's design has become outmoded as the underlying mandatory disclosure regime that has moved from an emphasis on disclosure at the time that an issuer makes a public offering, to an emphasis on the issuer's ongoing periodic disclosures. An efficiency analysis shows that, unlike U.S. law today, the relevant actors should have equally great civil liability incentives to comply with the disclosure rules whether or not the issuer is offering securities at the time. An issuer not making a public offering of securities should have no liability because the compensatory justification is weak. Deterrence will be achieved instead by imposing liability on other actors. An issuer's annual filings should be signed by an external certifier - an investment bank or other well capitalized entity with financial expertise. If the filing contains a material misstatement and the certifier fails to do due diligence, the certifier would face measured liability. Officers and directors would be subject to similar liability. Damages would be payable to the issuer. When an issuer is making a public offering, it would be liable to investors for its disclosure violations as an antidote to what otherwise would be an extra incentive not to comply. This design would address two major complaints concerning the existing U.S. civil liability system: underwriter Section 11 liability for a lack of due diligence concerning disclosures that in modern offerings underwriters have no realistic ability to police, and litigation-expensive issuer class action fraud-on-market liability. The system suggested here would eliminate both sorts of liability. But unlike elimination reforms proposed by underwriters and issuers, it would retain deterrence by substituting in place of these liabilities more effective and efficient civil liability incentives for disclosure compliance.

Determinants of Compliance With Disclosure Requirements of IFRS 4: Evidence From Quoted Insurance Companies in Nigeria

Publicly quoted companies are expected to fully comply with disclosure requirements of International Financial Reporting Standards (IFRS) during the preparation and presentation of their financial reports. However, this is far from what is obtainable in real situation; as evident in the existing literature. Hence, this study examined the determinants of compliance with disclosure requirements of International Financial Reporting Standard (IFRS 4 - Insurance contracts) among quoted insurance companies in Nigeria; the study further examined the influence of four company attributes (leverage, profitability, liquidity, and size) on the extent of compliance. With the aid of a self-constructed compliance checklist, an index was derived to quantify the level of compliance with disclosure requirement of IFRS 4; after applying the checklist to the 2012-2014 annual reports of sample companies. The study used panel regression technique to examine the influence of the four company attributes on the extent of compliance. The results showed an aggregate mean compliance of 80.38% to IFRS 4 disclosure requirements. A significant positive relationship was found between the level of compliance and company liquidity, and profitability (both at 5% level of significance), while a significant negative relationship was found between company leverage and extent of compliance (at 10% significance level). The study recommended among others that; regulators’ compliance enforcement and monitoring mechanism be improved upon, as well as exercising great caution and put in more attention while assessing the disclosure compliance of highly leveraged companies.

The Moderating Effect of Audit Opinion on The Local Government Financial Performances and The Disclosure Compliance of Financial Information

<p><em>This study is aimed to analyze the effect of financial performance indicators such as absorption of local expenditure ratio, effectiveness ratio, and financial independence ratio </em><em>on </em><em>the disclosure compliance of financial information on the website, as well as audit opinion as moderating variable. The sample of the study is the local governments in Java with consisting of 81 selected local governments within three years period. The data are analyzed with multiple regression analysis using the fixed-effect method.</em></p><p><em>The results show that the absorption of the local budget ratio cannot encourage the disclosure compliance of financial information on the website. While the effectiveness ratio and the financial independence ratio </em><em>are positively associated with</em><em> the disclosure compliance of financial information on the website. This study also finds that audit opinion </em><em>weakens</em><em> the effect of financial independence ratio on the disclosure compliance of financial information on the website. However, audit opinion cannot moderate the effect of absorption of local budget ratio and the effectiveness ratio on the disclosure compliance of financial information on the website</em><em>. </em><em></em></p><strong><em>Keywords: </em></strong><em>audit opinion; financial performances, information</em>

Caregivers' perspectives on disclosure, care, and treatment among pediatric HIV/AIDS patients in South India: A qualitative study.

Background:Rollout of antiretroviral therapy (ART) has helped to achieve the increased life span among pediatric HIV patients. The psychosocial aspects of parents or caregivers can affect the treatment adherence in children and the disease outcome.Aims and Objectives:This study aims at understanding the perspectives on disclosure of HIV status, stigma, antiretroviral treatment, and compliance among caregivers of children attending ART clinic in South India and to explore the barriers to treatment-seeking behavior.Materials and Methods:This facility-based qualitative study was carried out among caregivers of pediatric HIV patients <15 years of age. In-depth interview was conducted on caregivers after informed consent in the absence of the child, focusing on stigma, disclosure of HIV status to children, adherence, and coping strategies followed by the parents. The complete interviews were transcribed in English, and content analysis was done to identify the emergence of codes. Interview was conducted among mothers of affected child. The disease status of the children was known only to the parents and not to the children themselves (excepting one) or siblings. Parents intended to keep it confidential for the affected children as long as possible. Nevertheless, to maintain adherence and to prevent disclosure of HIV status, mothers traveled to this ART center from very far places, medical records were hidden, and tablets were removed from the strips and said to be medicines for energy and protection.Conclusion:Mothers of HIV-positive children faced many difficulties to prevent the disclosure of the diagnosis from the affected children and others, which is not very conducive to adherence to the ART regimen. Effective disclosure strategies to manage this emotionally vulnerable group are an urgent need.

CEO Characteristics and Timeliness of Financial Reporting of Vietnamese Listed Companies

CEO Characteristics and Timeliness of Financial Reporting of Vietnamese Listed Companies

The main determinants of differences in compliance levels of disclosure items for IAS 16 in BIST

PurposeThis paper aims to empirically examine the main determinants of the compliance level of disclosure requirements for IAS 16, as well as factors that may explain the differences in the levels of compliance within companies.Design/methodology/approachThe association between the level of compliance and various corporate characteristics was examined using Chi-square Automatic Interaction Detector (CHAID) analysis in financial disclosures for IAS 16. CHAID analysis was applied to the manufacturing companies listed in Borsa Istanbul for the years 2012 and 2013.FindingsIt was found that the most significant factor is the auditor reputation within different nodes such as size or free float rate. In most of the studies, correlation is used to determine the association between different factors, but this study is the first one that uses the CHAID analysis which offers an adjusted significance testing, and at the same time classification of the interaction between variables.Research limitations/implicationsThis paper provides insights into the primary factors of disclosure compliance that help to improve the structure of disclosures and the level of compliance in preparing future financial reports. The proposed improvements will also support further developments in financial reporting regulations regarding disclosures. The key limitation in this paper is that it concentrates on a specific standard and only covers two years. However, it provides suggestions for one of the most important standards that includes various disclosures.Originality/valueIn addition, this paper fills a gap in the literature about the compliance level of specific standards such as IAS 16 and the usage of CHAID analysis in such studies. The results were consistent with some previous studies regarding the relationship between compliance level, auditor reputation and size and it also highlight the effect of different disclosure items on compliance level.

Comparative study between IFRS and AAOIFI disclosure compliance

PurposeThis study measures and compares the level of compliance with the disclosure requirements provided by the International Financial Reporting Standards (IFRS) and the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). This study also aims to investigate the factors associated with this compliance in a sample of Islamic banks (IBs) in Gulf Cooperation Council member states.Design/methodology/approachThe sample consists of 39 IBs between 2010 and 2014. Among the selected IBs, 23 banks were complying with the AAOIFI standards and 16 banks were complying with the IFRS standards. An unweighted disclosure index was used to measure the level of compliance with IFRS/AAOIFI disclosure requirements.FindingsIt was found that the level of compliance with IFRS is higher than that of compliance with AAOIFI. In addition, the results reveal that compliance with IFRS/AAOIFI disclosure requirements is higher for larger and older IBs. Finally, it was observed that compliance was more noticeable for IBs having a higher leverage and multinational subsidiaries.Originality valueThese findings would be of great help to regulators and policymakers to better understand the accounting disclosure practices of IBs.

English

Disclosure allows investors to understand financial performance. The study provides findings on the level of compliance of mandatory disclosure concerning the impairment of goodwill under IFRS and its determinants. The examined sample is composed of 145 Italian listed entities. Size variables, performance variables and amortization of goodwill variables were tested in order to verify the determinant of the compliance with mandatory disclosure of the impairment of goodwill. We have run an ordinary least square (OLS) regression model: results show that the weight of goodwill, the way entities amortize goodwill and the size of the firm are positively associated with the mandatory disclosure requested by IAS 36. We have contributed to previous studies by providing findings on the role of mandatory disclosure, which is a fundamental characterization in accounting and extremely current after the publication of the Discussion Paper by the international accounting standards board (IASB). The contribution to current literature is to provide findings on the determinants of mandatory disclosure of goodwill in Italy. Key words: Intangible assets, goodwill, impairment test, financial mandatory disclosure, annual report, compliance, dscore index, IAS 36.

Does the corruption perception level of a country affect listed firms’ IFRS 7 risk disclosure compliance?

PurposeThis paper aims to examine the relationship between corporate governance, corruption and compliance with International Financial Reporting Standard (IFRS 7) risk disclosure requirements in listed firms in two Sub-Saharan Africa countries: Botswana and Ghana. This study tries to test whether the transparency level of a country has any impact on the transparency level of its firms.Design/methodology/approachThe study uses 174 firm-year observations between the period 2013-2015 for listed firms in the two countries. Each annual report was individually examined and coded to obtain the disclosure of corporate risk disclosure index. Descriptive analysis was performed to provide the background statistics of the variables examined. This was followed by regression analysis, which forms the main data analysis.FindingsThe results suggest that the extent of risk disclosure compliance over the three-year period is, on average, 63 and 53 per cent for Botswana and Ghana, respectively. The differences in the disclosure levels in the two countries can be attributed to the different levels of corruption in the two countries. One way of hiding corrupt practices is for companies to disclose scanty information.Originality/valueThis is one of the few studies in Sub-Saharan Africa that tests the transparency levels of listed firms in the two countries by considering the impact of corporate governance factors on IFRS 7 risk disclosure compliance. The findings of this study will help market regulators in Ghana, Botswana, the Sub-Saharan Africa Security and Exchange Commission (SEC) and the Sub-Saharan Africa exchanges in evaluating the adequacy of the current disclosure regulations in their countries.

The effects of accounting standards on the financial reporting properties of private firms: evidence from the German Accounting Law Modernization Act

This study investigates whether the 2009 German Accounting Law Modernization Act has affected the reporting and accounting practices of German private firms. In reforming German accounting standards, numerous accounting options were deleted, several accounting rules were transferred from IFRS to German GAAP with some modifications, and disclosure requirements were extended. In our analysis, we examine the changes in financial reporting and their effects on disclosures. We use four financial reporting property measures: discretionary accruals, the correlation between operating cash flow and accruals, the persistence of earnings, and the predictability of earnings. The results reveal no change across all financial reporting properties. Examining disclosure compliance for capitalized development costs and other provisions reveals substantial variation in compliance.

The levels of disclosure relating to mine closure obligations by platinum mining companies

Background: Mine closure obligations are economically significant, and the consequences of insufficient mine closure obligations are of public interest. The incidence of acid mine drainage and the high number of ownerless and abandoned mines in South Africa have brought the consequences of insufficient mine closure obligations in the mining sector into the spotlight.Aim: The aim of this study is to establish the extent to which platinum mines listed on the Johannesburg Stock Exchange (JSE) comply with a recommended disclosure framework.Setting: South Africa is the largest producer of platinum in the world. The study covers all platinum mines listed on the JSE.Methods: Using a framework, a census of the annual financial statements, integrated annual reports and sustainability reports or websites was conducted to determine the level of compliance of disclosure relating to mine closure obligations to the recommended disclosure framework.Results: The results show disclosure relating to mine closure obligations of platinum mines listed on the JSE is inconsistent and not sufficient for stakeholders to understand the scope, key assumptions, parameters or reliability of the assessment and calculation of mine closure obligations.Conclusion: The assumptions used to determine mine closure obligations are specialised and multi-disciplinary. The accuracy and reliability of mine closure obligations will improve dramatically through greater transparency and access to information. It is recommended that the JSE listings for mining companies should require a competent person’s report to provide disclosure on assumptions, key values and processes applied to determine the mine closure obligations. Furthermore, it is recommended that the Department of Mineral Resources implements a mechanism of independent assessment of mine closure obligations by experts on an ongoing basis.

Disclosure Responses to a Corruption Scandal: The Case of Siemens AG

In the current study, we examine the changes in disclosure practices on compliance and the fight against corruption at Siemens AG, a large German multinational corporation, over the period 2000–2011 during which a major corruption scandal was revealed. More specifically, we conduct a content analysis of the company’s annual reports and sustainability reports during that period to investigate the changes of Siemens’ corruption and compliance disclosure using both quantitative and qualitative methods. Through the lens of legitimacy theory, stakeholder analysis, and organizational facades, we find evidence that Siemens changed its compliance and corruption disclosure practices to repair its legitimacy in the wake of the 2006 corruption scandal. We analyze these strategies more closely by using the rational, progressive, and reputation facades framework (Abrahamson and Baumard in The Oxford Handbook of Organizational Decision Making, pp 437–452, 2008). Our primary findings suggest that the annual reports show peaks of disclosure amounts on corruption and compliance disclosures earlier than sustainability reports, which can be partly explained by analyzing the disclosures made about—and to—the different stakeholder groups. We find that the annual report focuses more on internal stakeholders such as employees, while the sustainability report focuses more on external stakeholders such as suppliers. We also find that the company uses the facades differently depending on which report is being analyzed.

The relationship between corporate governance mechanisms and IFRS 7 compliance: evidence from an emerging market

PurposeThis paper aims to investigate compliance with risk disclosure requirements under International Financial Reporting Standard (IFRS 7) by firms listed on the Ghana Stock Exchange (GSE) over a three-year period. Specifically, the paper examines the extent, quality and determinants of risk disclosure compliance with IFRS 7.Design/methodology/approachThe study uses 90 firm-year observations for the period 2011-2013 for firms listed on the GSE. Each annual report was individually examined and coded to obtain the extent and quality of corporate risk disclosure index. Descriptive analysis was performed to provide the background statistics of the variables examined. This was followed by regression analysis, which forms the main data analysis.FindingsThe results indicate that over the three years, the extent of compliance with IFRS 7 is, on average, 53 per cent, which is very low; the quality of the disclosures is, on average, 33 per cent, which is also very low. The regression results suggest that proportion of non-executive director (PNED) is significantly and positively associated with the extent of risk disclosure compliance under IFRS 7. Board size was found to be significantly and positively associated with quality of risks disclosure compliance.Originality/valueThis is the first study in Ghana that considered the impact of corporate governance factors on the extent and quality of IFRS 7 risk disclosure compliance. The findings of this study will help market regulators in Ghana in evaluating the adequacy of the risk disclosures by listed firms.

The extent of compliance with FRS 101 standard: Malaysian evidence

PurposeThe purpose of this paper is to investigate Malaysian companies’ compliance with mandatory accounting standards. Specifically, this study examines the efficacy of agency-related mechanisms on the degree of compliance with Financial Reporting Standards (FRS) 101, Presentation of Financial Statements. It so proceeds by focussing on corporate governance parameters (board characteristics and ownership structure) and other firm characteristics.Design/methodology/approachUsing data drawn from a sample of 105 Malaysian companies listed on the ACE market in 2009, the authors employ multiple regression analysis models to establish whether selected corporate governance and company-specific characteristics (proxying for agency-related mechanisms) are related to the degree of disclosure compliance.FindingsThe results indicate that the overall disclosure compliance is high (92.5 per cent). Furthermore, only firm size is positively associated with the degree of compliance. The other variables, those consisting of board independence, audit committee independence, CEO duality, the extent of outside blockholders’ ownership and leverage, do not show any significant relationship with the degree of compliance.Research limitations/implicationsThis study focusses on only one accounting standard (FRS 101) that is mandatory in Malaysia. FRS 101 is both structured and rigid, leaving no room for companies to conceal any particular information. The sample of Malaysian companies selected is restricted to those listed only on the ACE market. As such, the results cannot be generalised to every company in Malaysia.Practical implicationsThese results have important implications for policy makers because they suggest that whilst agency-related mechanisms may motivate compliance with mandatory standards, full compliance may be unattainable without regulations.Originality/valueThis is the only study in Malaysia to investigate the impact of regulatory requirements on corporate compliance level by companies listed on the new ACE market, which was introduced by the Bursa Malaysia in August 2009. This study contributes to the literature by examining the effects of both company-specific characteristics (such as company size, company age, liquidity, etc.) and corporate governance parameters on the degree of corporate compliance with mandatory disclosure, simultaneously, in contrast with prior studies which have examined them in isolation.

Vitiating role of money in electoral democracy and supreme court's endeavour of its purification

To realise the preambular ideal of true democracy, free and fair elections devoid of any bullying influence of money in electoral politics is inevitable. Money power vitiates the electoral system and has an ailing effect on quality of democracy due to infusion of unaccounted black money which finally terminates into policy favours to mysterious contributors. Besides it, bidding of party tickets, purchasing of votes, cleansing criminal taints from campaigning etc. leads to rigging of electoral arena of level playing field as higher the resources at disposal, higher will be the winnabilty ratio. Though the RPA, 1951 through its ceiling and disclosure provisions strives to curb this menace but more often flouted and bypassed. Supreme Court being conscious of these escapes routes endeavours to plug theses loopholes through its revolutionary pronouncement of mandatory disclosure of assets by the contesting candidates, widening the ambit of ceiling on election expanses done by a candidate, strengthening the Election Commission to observe strict compliance of financial disclosures of candidates etc. Despite these efforts, vulgar display of money in electioneering is kept unabated which needs to be checked by adopting a stern attitude and coordinated efforts of Supreme Court and Election Commission.

Developing a Model for Corporate Governance and Conflict of Interest Deterrence in Shari’ahbased Cooperatives

Different from a conventional cooperative, a Shari’ah-based cooperative observes Shari’ah principles. As these cooperatives offers Islamic financial products and involves in Shari’ah compliant investment, they are bound to observe Shari’ah governance structure, transparency, disclosure of information and strict compliance with Shari’ah principles. Compliance with the Shari’ah principles will strengthen public confidence in the credibility of the system of the Islamic Muamalat particularly in the cooperative movement. Due to the infancy of Shari’ahbased cooperative industry that needs for proper governance measures, this paper aims to discuss corporate governance in Shari’ah-based cooperatives in the attempt to propose a model for resolving stakeholders’ conflicts of interest