The purpose of this paper is to evaluate the mandatory and voluntary disclosure practice and its determinants in Kuwait, an emerging market that applies International Financial…
Abstract
Purpose
The purpose of this paper is to evaluate the mandatory and voluntary disclosure practice and its determinants in Kuwait, an emerging market that applies International Financial Reporting Standards (IFRS).
Design/methodology/approach
The study employs two main methods: an index-based analysis of mandatory, voluntary and aggregate disclosure as well as univariate and multivariate regression analysis of the determinants of disclosure levels.
Findings
The results show that the average aggregate disclosure level is 44 per cent. None of the sample companies complied fully with the disclosure requirements of IAS/IFRS. The extent of voluntary disclosure is also relatively low, although the documented amount represents an increase on that revealed in earlier studies in Kuwait. The multivariate regression results reveal that firm size is positively associated with voluntary disclosure, while mandatory disclosure is negatively linked to profit.
Research limitations/implications
The findings are based on evidence from a single country and further work is needed to ascertain the extent of generalisability.
Practical implications
The results of the study have implications for policy makers, professional accounting bodies and regulators as they contribute to the debate on to develop and encourage both compliance with mandatory disclosure requirements and voluntary practice. The evidence also has implications for attempts to derive full understanding of the factors driving disclosure practices in the developing world, and how these differ from behaviour in the world’s richest nations.
Originality/value
The study contributes to the existing literature in the area in two main ways. First, as compliance with mandatory disclosure requirements in developed countries is total (or near to total) in most cases, it has been the subject of little empirical enquiry. By focussing instead on a developing nation – one that has adopted IFRS – the analysis facilitates the provision of novel evidence regarding both the nature and determinants of failure to follow disclosure rules. Second, prior studies generally fail to distinguish between financial and non-financial firms, despite differences in reporting standards and norms across the two groups; the present study makes this distinction.
Details
Keywords
Issa Dawd and Lanouar Charfeddine
This study aims to analyse the drivers of the shift towards the global adoption of International Financial Reporting Standards (IFRS) in 23 non-European Union countries over the…
Abstract
Purpose
This study aims to analyse the drivers of the shift towards the global adoption of International Financial Reporting Standards (IFRS) in 23 non-European Union countries over the period from 2001 to 2019.
Design/methodology/approach
This study used various panel data models, including fixed effects panel Logit and Probit models for IFRS adoption status, and ordered panel data models for examining the extent and timing of IFRS adoption, accommodating the multifaceted nature of the dependent variable.
Findings
The results suggest that countries with a high Anglo-Saxon cultural background, human development and strong legal enforcement, particularly in controlling corruption, are more likely to adopt IFRS fully and early. Notably, the extent of business disclosure in these countries impacts IFRS adoption status but does not significantly affect the extent or timing of adoption. Surprisingly, the findings reveal that countries with higher financial openness are less likely to adopt IFRS.
Research limitations/implications
These results are relevant to standard setters and regulators in countries on the verge of adopting IFRS who are interested in financial, institutional and cultural factors and their impacts on IFRS adoption.
Originality/value
This research stands out for its emphasis on the pivotal role of cultural and institutional nuances in shaping the trajectory of IFRS adoption within non-European Union countries, thereby broadening the accounting discourse.