International Accounting Standards in Saudi Nationals - Dissertation Example

International Accounting Standards in Saudi Nationals Abstract Saudi is one of the largest economies among other regions which are mostly dominated by Saudi Nationals. When Capital Markets Authority (CMA) had issued the Circular No. 2-28-2008 also known as swap agreement, the door to foreign investment had been opened. It had led to a greater investment opportunity that made Saudi market more mature and transparent. Firms are increasing the voluntary disclosure of information to attract prospective investors, since then, Saudi became a competitive economic environment. The participation of foreign investors in share trading and the increasing voluntary disclosure among Saudi firms had called the attention of regulators to improve the regulatory structure. The main thrust of this study is to practically examine the relationship between several firm-specific attributes: firm size, leverage, assets-in-place, return on equity and other determinants, and the level of annual report voluntarily disclosed by 72 non-financial companies listed on Saudi Stock Exchange (SSE). The result shows that all of the firm-specific attributes used in this study are all significantly related to the level of voluntary disclosure. 1. Introduction It has been very visible that companies nowadays wanted to be part of the global market; thus they should have more knowledge on the complexity of the environment. For the reason that global companies attract more and more investors, they are voluntarily disclosing the information for investor’s satisfaction (Schuster & O‘Connell, 2006, p.1). Although voluntary disclosure is not required, it has been the strategy of companies to have their clients be more aware and benefited (McNeil & Brian, n.d., p.251). Voluntary disclosure is either under the provision of Generally Accepted Accounting Principles (GAAP) or the International Accounting Standards (IAS). In 1986, its objective had grown importance when the Environmental Protection Agency (EPA) had issued an audit policy for company’s compliance (Perlman, 2009, p.88). EPA’s audit policy has been revised due to many enquiries and the revision was released last 2000 (Kelly & Braker, 2000, p.5). Saudi Stock Exchange (SSE) also known as Tadawul was conveyed in 1984 by the ministerial committees of Saudi government because the government wanted to regulate the securities market (Economy Watch, n.d.). In the initiation, SSE was under the regulation of Saudi Arabian Monetary Agency (SAMA); recently, the concern is now being credited to the Capital Markets Authority (CMA) (Evans, 2010; Samba Report Series, 2009, p.4). Saudi had been successful in the market being one of the largest economies and best-performing region with around $313 billion market capitalization, and with 87 listed companies last 2007 (Niblock & Malik, 2007, p.219; Samba Report, 2009, p.3). SSE (Tandawul) in 2009 was having the most numbered companies (134 listed firms) that worth about $319 billion which was mostly dominated by financial services and Petrochemicals (Samba Report Series, 2009, p.4; Khalil, 2010). The main thrust of this paper is to examine and assess the level of disclosed annual report among the non-financial firms listed in Saudi Stock Exchange (SSE). Also, it is created to investigate the hypothesized impact of firm attributes to the level of voluntary disclosure. 2. Overview of the Study Despite of the fact that Saudi has a strong economy, its stock market is still dominated by Saudi nationals (Evans, 2010). The government of Saudi has come to a situation of different views and undecided on what to favor. It wants to have a more transparent and mature stock market and the only way to attain this is to have long-term foreign investors; on the other hand, it is anxious to open the door of investment to foreign investors. According to Samba Report Series (2009), “Tandawul (SSE) was opened to GCC nationals, though their participation remains limited as they have tended to focus on their domestic markets.” CMA issued Circular No. 2-28-2008 or the swap agreement that allows foreign investors to participate in the share trading of Saudi shares (Al Tamimi & Company, 2008). Indeed, the new agreement has been the portal of overseas investors towards Saudi market. Foreign investors that want to be part of Saudi market need to gather more information about the operation and financial conditions of different firms which could be found in the annual report. Voluntary disclosure in the annual report of Saudi listed firms has been a popular topic because of the lag of time in releasing the accounting reports, and also about the mandatory and voluntary disclosure of information (Naser & Nuseibeh, 2003, pp.67-68). It had shown that voluntary disclosure among companies is much higher compared to the compliance of mandatory disclosure. Specific firm attributes have something to do with this corporate voluntary disclosure in Saudi being its determinants. Upon knowing the relationship between the determinants and disclosure, the variables (dependent and independent) shall be used as a methodology. This paper also studies the association between voluntary disclosure and foreign investors in Saudi in terms of investment opportunity. It shall be divided into 8 sections: Section 2 is the overview about the corporate voluntary disclosure in the annual reports evidence from Saudi listed firms. Section 3 talks about the objectives and motivations of the study. Section 4 is the related literature on voluntary disclosure and firm specific characteristics. Section 5 identifies the determinants of corporate voluntary disclosure, i.e., firm size, leverage, assets in place, return on equity, type of auditor, and other related things. Section 6 presents the development of hypotheses. Section 7 outlines the proposal methodology, sample selection and variable measurement. And the last Section contains the data/main findings and conclusion. 3. Objectives and Motivations Most of the firms wanted to attract investors in the global market to have an additional market capital. When the requirements of the disclosure is in excess, the firm has a choice whether to add more information in its annual report that can be used by investors in decision making (Meek, et al., 1995). The increasing scenario of voluntary disclosure among companies had created a doubt on the quality and quantity of the released information (Schuster & O’Connell, 2006, p.6). The releasing of more and more information on voluntary basis might be beneficial to the firm in many ways despite of the regulations being implemented. On the other hand, a contrasting view had been created which involved the benefits and the greater cost of preparation in giving additional information (Schuster & O’Connell, 2006, p.7; McNeil & Brian, 2007, p.250). The objective is to explain the significance of firm attributes such as firm size, leverage, assets-in-place, return on equity, type of auditor, and many more. According to the study of Meek, et al. (1995) and Shaharuddin & Rashid (n.d., p.3), these attributes are important factors that influence and examined the extent of voluntary disclosures which are used in many studies. Companies believe that by voluntarily giving additional information in the market through their annual reports, they would surely capture the attention of investors in the market (Victoria, et al., n.d., p.771). These have motivated the companies to continually give excess information from the mandatory requirements, which are influenced by innovation diffusion theory, institutional change theory and economic based theories (Victoria, et al., n.d., p.772). 4. Literature Review on Voluntary Disclosure and Firm Specific Characteristic 4.1 Voluntary Disclosure When EPA had acknowledged the importance of voluntary disclosure it issued an audit policy with a revision being released last 2000 that include: 1)Extending the deadline for disclosure from 10 to 21 days; 2) clarifying whether multi-facility companies may be deemed to have “independently discover” violations despite of the prior initiation of government inquiry at one or more facilities; and 3) clarifying how the “prompt disclosure” and “repeat violation conditions” apply to newly acquired companies. (Kelly & Braker, 2000, p.5) The stated revision will help the government to discover if the companies are being untimely or insufficient in making a voluntary disclosure. This had been helpful especially to those countries that are experiencing growth in foreign investment and voluntary disclosure, just like Saudi. The growing interests of foreign investment in Saudi market were brought about by the new regulations of CMA. Saudi has been illustrated by the 2010 US Department of Commerce Country Commercial Guide as a region which is opened to all outside investors and free in agreement in its financial market (eStandards Forum, 2010). The opened market is still regulated by CMA to protect the investors from unfair practices in giving out information. Also, to prevent the significant loss of investors just like what had happened in 2006, CMA issues guidelines to its listed companies on how to trade (Hussainey & Nodel, 2008, p.46). Along with the recognition of foreign investors in Saudi market are the regulations on how and what information has been produced in the market. The intensity of the market lies with the institutional involvement, particularly with the participation of foreign entities. Under the regulatory structure of CMA, trading guidelines had been created to determine if the information being disclosed voluntarily had served its purpose and interests. According to Naser and Nuseibeh (2003, p.43), “accounting practices in Saudi Arabia are regulated by three laws: the company law, accountancy law and income tax and Zakat law. All the mentioned laws are followed by every firm that contains procedure and measurement in financial reporting. Saudi companies are expected to have financial reporting on an annual and quarterly basis in compliance with the mandatory disclosure rules governed by Companies Law of 1965 (eStandards Forum, 2010). Although there is the presence of mandatory disclosure rules, firms still share its financial reporting data on a voluntary basis which may sometimes not in favored with the firm. Many investors grab the opportunity of using the overflowing information in the market in its selection process without finally investing in it which is very costly to the releasing firm (Meier-Schatz, 1991, p.80). The balance between disclosure and cost will only occur when the cost used in financial disclosure decreases. Also, the information being disclosed by the firm on a voluntary basis will be an advantage to its competitors to have an easy access. These externalities are both having a negative impact for the firm because the two parties had access the information for free and the firm got nothing in return. To avoid these unfair happenings in the capital market, mandatory disclosure rules have been implemented. 4.2 Firm Specific Characteristics This study will involve the firm-specific attributes as measurement methodology such as the size of the firm, leverage, assets-in-place (growth), return on equity, type of auditor and other related determinants. These specific-firm characteristics are commonly used by previous studies for it has been considered as relevant factors in every firm performance and capital market structure (Glen, 2005, p.250). The characteristics which will be used in this study are among the many determining variables of corporate patterns. In disclosure literature, it shows that voluntary disclosure and firm specific attributes are related wherein many studies examine each different role. There are general research about corporate disclosure on financial and non-financial companies in the market, such as the work of Litan and Wallison (2000), Razeen and Karbhari (2007), Cheung, et al. (n.d.), Camfferman (1997), Kamaruddin, et al. (2004), Barako (2007), and many more. Some of the mentioned studies will be presented. The study of Litan and Wallison (2000) examined the level of disclosure among the 100 out of 500 Fortune companies that have websites. Also the advantages and disadvantages of the disclosure were presented in the internet disclosure. Kamaruddin, et al. (2004) investigated the impact of the new standards on the listed companies of Kuala Lumpur Stock Exchange. The study reveals the association between the disclosures of extraordinary items in the financial statements of Kuala Lumpur companies and the firms attributes for six accounting periods. Cafferman (1997) studied the published annual reports of about 307 firms listed in the Amsterdam Stock Exchange. The factors that were less tangible and objectives were being examined on how it influenced the annual reports of the firms. The number of studies presented had come to a consensus about firm size that is considered as the significant factor in measuring the level of voluntary disclosure (Barako, 2008, p. 3). 5. Determinants of Corporate Voluntary Disclosure Annual report is an important communication which bridges the company and the final users. It should be given extra consideration especially in the process of disclosure. The very obvious thing in the presented studies is the direct relationship of firm attributes in determining the quality of disclosure. Aside from the relationship of firm-specific attributes and disclosure, the involvement of the expected and unexpected returns and earnings of the company is also being tackled (Riahi-Belkaoui, 2002, p.67). As Saudi opens its doors to foreign investors, according to Araya (2005, p.50), the factors of firm attributes, type of industry, market, regulatory, and informal forces are recommended to be followed to attain success. Particularly, this study will give focus on the firm attributes, such as firm size, leverage, assets-in-place, type of auditor, return on equity, foreign listing status and many more as determinants of voluntary disclosure (Jaffar, et al., 2007; Hossain, et al., 1995). 6. Development of Hypotheses This paper will examine the impact of information being disclosed in the market on a voluntary basis towards the increasing foreign investors. Although there have been stated regulations about mandatory disclosure, companies are still doing the voluntary disclosure to satisfy the demands of opportunity from the capital market (Broberg, et al., 2009). According to Meier-Schatz (1991, p.81), only 10% of the listed firms in Securities Exchange Act are following the mandatory disclosure and the 90% are less capable and still doing the voluntary disclosure. These mandatory regulations are created because it reduces the cost in the dissemination of information but companies are not following it. 6.1 Firm size. It has been argued that firm size and voluntary disclosure is having a direct relationship in a certain company. According to Riahi-Belkaoui (2002, p.199), the performance of bigger firms will be more advantageous than the smaller firms because they have more resources like for example in giving additional information to the investors which is very costly for the smaller firms. One of the justified reasons is the cost of preparation behind voluntary disclosure, wherein the expenses are not affordable to smaller firms compared to the larger firms (Hanifa & Rashid, 2005, p.27; Nasir & Abdullah, n.d., p.17). According to Shammari (2008), “size was important in determining corporate disclosure levels regardless of a company’s country or origin and category of disclosure.” For this reason, it is hypothesized that: Hypothesis 1: Ceretis paribus, there is a positive relationship between the firm size and the extent of voluntary disclosure. 6.2 Leverage. Firm size and leverage are factors that are considered to have the same status, wherein these two explaining factors are needed in the disclosure of information (Shammari, 2008). Saudi has opened the door to foreign investors that consequently became very attractive. Companies with higher leverage are subject to a higher regulatory demand and expected to disclose more information in a voluntary basis compared to the lower level of leverage. Based on studies, leverage together with the firm size, foreign listing status is considered to be significant in the level of disclosure (Hossain, et al., 1995; Shammari, 2008). Hence, the association of leverage and the level of voluntary disclosure in relation to Saudi investors are hypothesized as: Hypothesis 2: Ceretis paribus, leverage is positively related to the extent of voluntary disclosure. 6.3 Assets-in-Place. Companies have assets that are already owned and assets that are to be acquired (Shammari, 2008). If the firm has more assets-in-place, the value is less which is represented by the growth options (assets to be acquired) because of larger firm value proportion. In short, according to Riahi-Belkaoui (2000, p.70), if assets-in-place is low, the growth opportunities are high. As assets-in-place is viewed as a combination of investment options, therefore, if the opportunity is low the firms would likely not to increase its voluntary disclosure. In the study of Chow and Wong-Boren (1987) about the disclosure of 52 listed firms in Mexican Stock Exchange, it concluded that assets-place is not positively related to the overall extent of disclosure. Hossain, et al. (2008) and Shammari (2008), have the same conclusion with Chow and Wong-Boren (1987), in which they considered the assets-in-place as an insignificant factor in the overall extend of disclosure. Accordingly, it is hypothesized that: Hypothesis 3: Ceretis paribus, asset-in-place is negatively associated with voluntary disclosure. 6.4 Return on Equity (ROE). This is one of the performance variables that measures profitability which is hypothesized that disclosed information is more evident on firms that has relatively higher return on equity (Goliath, 2010). It has been suggested in agency theory that larger profitable firms are wishing to disclose more information compared to the less profitable companies for the reason that they want to be differentiated by investors (Shammari, 2008). According to Akhtaruddin & Hossain (2008), just like leverage and firm size, return on equity is considered to be a significant variable that is positively associated on the extent of annual report disclosure. Accordingly, it is hypothesized that: Hypothesis 4: Ceretis paribus, return on equity is positively associated with voluntary disclosure. 6.6. Other Related Determinants. Type of Auditor - In Saudi, financial statements of companies are obliged to be audited based on Companies Law of 1965 by the Ministry of Commerce (eStandards Forum, 2010). The economy of Saudi is booming especially in its oil industry that really attracts investors and consequently increases the demand of auditors among companies (Haniffa & Hudaib, 2007, p.184). Before international audit firm operates it should be affiliated with the local firm and it should employ at least 30% Saudi national. This affiliation is considered as Big Four and those firms that are not affiliated by international audit firm are called the non-Big Four. Based on the study of Shammari (2008) in the firms of Kuwait, she stated that Big Four audit firms are having the high level of voluntary disclosure compared to the non-Big Four. Camfferman (1997) and Peters, et al. (n.d.), have discovered that the type of auditor and voluntary disclosure is having a weak and inverse relationship, while the study of Awang et al. (2004, p.92), is a contradiction wherein it stated that the type of auditor is significant. There are three developed categories of voluntary disclosure namely: corporate environment, social responsibility and financial information which are measured by the firm attributes. Other related determinants aside from the earlier mentioned are ownership structure, age, ownership control, internationality, industry, complexity and cross-listing (Shammari, 2008; Akhtraruddin & Hossain, 2008). 7. Proposal and Methodology In doing the research about voluntary disclosure, researchers are using different methodology which they see as the best qualified. Since it is difficult to determine and to predict the quality and level of disclosure, it is essential to have a disclosure index in the study (Barako, 2008, p.118). In this study, a disclosure index will be used as a proposed research methodology to measure the intensity of the disclosure in Saudi listed firms based on the released annual reports. This method is reliable for it has been used by various studies, and the disclosure index of this study will be consisted of 76 items of information. 7.1SampleSelection Companies used in this study are all non-financial firms published by the Saudi Stock Exchange (Tadawul). As of 2010, there are 144 firms listed on the Saudi Stock Exchange based on Tadawul (2010). Samples of 72 non-financial firms were randomly selected that will represent that entire population which is classified into: petrochemicals, industrial, telecoms, consumer goods and services, oil and gas, utilities and health care. This classification is based on Saudi (Tadawul) Stock Exchange. At least 50% of the companies are presented and used in the survey (see Appendix 2). 7.2 Variable Measurement A. Dependent Variable Voluntary disclosure has been described by Barako (2008) as “the discretionary release of financial and non-financial information through annual reports over and above the mandatory requirements....” This cannot be measured directly that is why a disclosure index is constructed which is considered as the dependent variable created as a methodology to measure the firm attributes (Bhojraj, et al., 2000, p.3). The evidences that are being presented in the disclosure index are being free from biases and are generally consistent. The developed index of disclosure is being based on the latest information released by Saudi non-financial firms found in SSE. The disclosure index list is based on earlier research in which not all presented items are being used, indeed it is being revised. After the revision, an approximately 90% (75) of the items are selected to be included in the disclosure index. The listing of discretionary items is followed by the development of coding scheme wherein if the item is being disclosed by the certain company it receives the scores of one and zero if it is not. The disclosure index of this study is being presented in Appendix 3. The mean and standard deviation (descriptive statistics) for each independent variable can be found in Table 1 (See Appendix 1). B. Independent Variable Data that belongs to independent variables are taken from the examined annual reports released by the randomly selected firms in SSE. Table 2 presents the correlation for dependent and independent variables which is computed with the use of Pearson product-moment correlation (r) (See Appendix 1). Among the independent variables that are being measured are firm size, leverage, assets-in-place (growth) and return on equity (ROE). 8. Data/Main Findings The data as well as the findings of this study is being presented in Table 1 which contains the descriptive statistics for the variables (See Appendix 1). The overall mean disclosure is 34%, relatively higher than  Shammari (2008) in Kuwait (15%), Hossain et al. (1995) in New Zealand (18%) and Meek, et al. (1995) in US, UK and Continental Europe (18%). In the overall level of disclosure, the lowest percentage (minimum) is 13% and 81% is the highest (maximum). Table 2 (See Appendix 1) shows the correlation of variables in which the highest correlation is between firm size and leverage (0.4673), and firm size and growth (0.2011), to test that the correlation is different from zero (bivariate statistical correlation). The result of Pearson product-moment correlation (r) revealed that firm size (0.2869), growth (0.0102), leverage (0.123), and return on equity (0.2279), is positively related with voluntary disclosure (p< 0.01). The evidence suggests that firm size, growth, leverage and return on equity are statistically related to the level of information voluntary disclosed by Saudi companies. These findings match to hypothesis 1, 2 and 4, and are likely similar to the studies of Hossain, et al., (1995); Shammari, (2008); Akhtaruddin & Hossain (2008). Hypothesis 3 does not conform to the expected negative result because the result tells that it is positively related to the level of voluntary disclosure which contradicts to the findings of Chow and Wong-Boren (1987). This statistical result about assets-in-place (growth) is becoming significant for the current investment scene of Saudi firms as it contradicts with the hypothesis. Conclusion Presented in this study is the relationship between firm attributes and the voluntary disclosure of 72 listed non-financial companies in Saudi Stock Exchange. Generally, the level of voluntary disclosure of information in Saudi based on the provided scores for all variables is relatively high. It is much higher compared to earlier studies of other countries. It has been proven in the study that firm size is a significant attributes that mostly appeared in the variability of disclosure level. This coincides with the findings of earlier research using the data of other countries in the disclosure index. The determinants which were derived from the study of Jaffar, et al., 2007; Hossain, et al., 1995, were all significantly related to the level of voluntary disclosure in Saudi firms. Therefore, the main conclusion of this study is focus on firm size wherein the level of disclosure varies. Reference Lists Akhtaruddin, M. & Hossain, M., 2008. Investment opportunity set, ownership control and voluntary disclosures in Malaysia. Journal of Administration and Governance, [Online]. 3 (2), pp. 25-39. Available at: http://www.joaag.com/uploads/3_AkhtaruddinFinal3_2.pdf [Accessed 27 July 2010]. Al Tamimi & Company, 2008. Swap agreements allow foreign investors access to KSA shares under new CMA policy. Law Update, [Online] Dec., (213). Available at: http://newsweaver.ie/altamimi/e_article001313702.cfm [Accessed 27 July 2010]. Araya, M., 2005. FDI and the environment: what empirical evidence does and does not - tell us. In: L. Zarsky, ed. 2005. International investment for sustainable development: balancing rights and rewards. UK: Earthscan. Ch.2. Awang, M. Zain, M.M. & Ibrahim, M.K., 2004. Disclosure of financial ration in annual report: evidence from Malaysian market. In: K.A. Kamarruddin, et al., eds. 2004. Financial reporting in Malaysia: some empirical evidence. Kuala Lumpur: Utusan Publications & Distributors Sdn. Bhd. pp. 90-94.   Barako, D.G., 2008. Determinants of voluntary disclosures in Kenyan companies annual reports. African Journal of Business Management, 13 July, 1 (5), pp. 113-128. Bhojraj, S. Blacconiere, W.G. & D’Souza, J., 2000. Voluntary disclosure in a multi-audience setting: an empirical investigation, [Online] pp. 1-36. Available at: http://www2.owen.vanderbilt.edu/fmrc/Activity/paper/D%27Souza_Paper.pdf [Accessed 27 July 2010]. Broberg, P. Tagesson, T. & Collin, S.O., 2009. What explains variation in voluntary disclosure? A study of the annual reports of corporations listed on the stockholm stock exchange. Journal of Management and Governance, [Online] 23 July. Abstract only. Available at: http://www.springerlink.com/content/c446740070418677/ [Accessed 27 July 2010]. Cafferman, K., 1997. Voluntary annual report disclosure by listed Dutch companies. Amsterdam: Garland Publishing. Cheung, S.Y. Connelly, J.T. Limpaphayom, P. & Zhou, L., n.d. Determinants of corporate disclosure and transparency: evidence from Hong Kong and Thailand, [Online] Available at: http://www.ccfr.org.cn/cicf2006/cicf2006paper/20060111155540.pdf [Accessed 27 July 2010]. Chow, C.W. & Wong-Boren, A., 1987. Voluntary financial disclosure by Mexican corporations. The Accounting Review, [Online] July, 62 (3), pp. 533-541. Available at: http://www.jstor.org/pss/247575 [Accessed 27 July 2010]. Economy Watch, n.d. Saudi stock exchange, [Online] Available at: http://www.economywatch.com/stockexchanges/saudi.html [Accessed 23 July 2010]. eStandards Forum, 2010. International standards on auditing, [Online] Available at: http://www.estandardsforum.org/saudi-arabia/standards/international-standards-on-auditing [Accessed 27 July 2010]. Evans, J., 2010. A sleeping giant in the process of waking. The Wall Street Journal, [internet] 17 May. Available at: http://online.wsj.com/article/SB10001424052748703961104575225903898529836.html [Accessed 26 July 2010]. Glen, J., 2005. Debt and firm vulnerability. In: M. Pomeleano, & W. Shaw, eds. 2002. Corporate restructuring: lesson from experience. Washington, DC: The World Bank. Chapter 13. Goliath, 2010. Empirical evidence on the depth of corporate information disclosure in developing countries: the case of Jordan. International Journal of Commerce, [Online] 1 Sept. Available at: http://goliath.ecnext.com/coms2/gi_0198-64150/Empirical-evidence-on-the-depth.html [Accessed 27 July 2010]. Haniffa, R. & Hudaib, M., 2007. Locating audit expectations gap within a cultural context: the case of Saudi Arabia. Journal of International Accounting, Auditing and Taxation, [Online]. 16, pp. 179-206. Available at: http://ipac.kacst.edu.sa/eDoc/2008/171138_1.pdf [Accessed 27 July 2010]. Hanifa, M.H. & Rashid, H.M., 2005. The determinants of voluntary disclosure in Malaysia: the case of internet financial reporting. Unitar E-Journal, [Online] Jan., 2 (1), pp. 22-42. Available at: http://myais.fsktm.um.edu.my/8147/1/The_determinants_of_voluntary_disclosures.pdf [Accessed 16 July 2010]. Hossain, M. Perera, M.H.B. & Rahman, A.R., 1995. Voluntary disclosure in the annual report of New Zealand companies. Journal of International Financial Management and Accounting, [Online]. 6 (1), pp. 69-87. Abstract only. Available at: http://www3.interscience.wiley.com/journal/119964588/abstract [Accessed 16 July 2010]. Hussainey, K. & Nodel, A., 2008. Corporate governance online reporting by Saudi listed companies. In: M. Tsamenyi & S. Uddin, eds. 2008. Research in Accounting in Emerging Economies, Volume 8. UK: Emerald Group Publishing Ltd. pp. 39-64. Jaffar, et al., 2007. Determinant factors affecting quality of reporting in annual report of Malaysian companies. Malaysian Accounting Review, [Online]. 6 (22). pp. 19-42. Abstract only. Available at: http://myais.fsktm.um.edu.my/10637/ [Accessed 26 July 2010]. Kamaruddin, K.A. Ibrahim, M.K. & Zain, M.M. eds., 2004. Financial reporting in Malaysia: some empirical evidence. Kuala Lumpur: Utusan Publications & Distributors Sdn. Bhd. Kelly, T.J. Jr. & Braker, G.S., 2000. Risks & rewards of voluntary disclosure under EPA’s audit policy. Contemporary Legal Notes Series, [Online]. (34), pp. 1-14. Available at: http://www.venable.com/files/Publication/d2baa799-2769-44fc-81c0-70b72db772ea/Presentation/PublicationAttachment/32254ea3-a7db-42fd-a0af-3b13f35f3e9f/512.pdf [Accessed 23 July 2010]. Khalil, M.C., 2010. Nikken raises the stakes. World Architecture News.com, [internet] 2 Mar. Available at: http://www.worldarchitecturenews.com/index.php?fuseaction=wanappln.projectview&upload_id=13563 [Accessed 23 July 2010]. Litan, R.E. & Wallison, P.J., 2000. The GAAP gap: corporate disclosure in the internet age. Washington, DC: The AEI Press. McNeil, B.F. & Brian, B.D. eds., 2007. Internal corporate investigation. 3rd Ed. Illinios: ABA Publishing. Meek, G.K. Roberts, C.B. & Gray, S.J., 1995. Factors influencing voluntary annual report disclosures by U.S., U.K. and continental European multinational corporations. Journal of International Business Studies, 26 (3), pp. 555-572. Meier-Schatz, C., 1991. American legal harmonization from a European perspective. In: R.M. Buxbaum, et al., eds. 1991. European business law: legal and economic analyses on integration and harmonization. NY: de Gruyter. pp. 61-88. Naser, K. & Nuseibeh, R., 2003. Quality of financial reporting: evidence from the listed Saudi nonfinancial companies. The International Journal of Accounting, [Online]. (38), pp. 41-69. Available at:  http://ipac.kacst.edu.sa/eDoc/2004/143047.1-20040300321.pdf [Accessed 26 July 2010]. Nasir, N.M. & Abdullah, S.H., n.d. Voluntary disclosure and corporate governance among financially distressed firms in Malaysia, [Online]. pp. 1-44. Available at: http://business.curtin.edu/files/nasir-abdullah.pdf [Accessed 26 July 2010]. Niblock, T. & Malik, M., 2007. The political economy of Saudi Arabia. Oxon: Routledge. Perlman, C.R. ed., 2009. Environmental litigation: law and strategy. Illinois: ABA Publishing. Peters, G.F. Abbott, L.J. & Parker, S., n.d. Voluntary disclosures and auditor specialization: the case of commodity derivative disclosures, [Online]. pp. 1-32. Available at: http://aaahq.org/audit/midyear/01midyear/papers/discloseParker.pdf [Accessed 27 July 2010]. Razeen, A. & Karbhari, Y., 2007. An empirical investigation into the importance, use, and technicality of Saudi annual corporate information. In: J. Timothy Sale, ed. 2007.Advances in international Accounting, Volume 20. UK: JAI Press. pp. 55-74. Riahi-Belkaoui, A., 2000. Accounting and the investment opportunity set. Westport, CT: Greenwood Publishing Group, Inc. Riahi-Belkaoui, A., 2002. Multinationality: earnings, efficiency, and market considerations. Wesport, CT: Greenwood Publishing Group, Inc. Samba Report Series, 2009. The Saudi stock market: structural issues, recent performance and outlook, [Online]. pp. 1-13. Available at: www.samba.com [Accessed 23 July 2010]. Schuster, P. & O’Connell, V., 2006. The trend toward voluntary corporate disclosure. Management Accounting Quaterly, [Online]. 7 (2), pp. 1-9. Available at: http://www.imanet.org/pdf/3638.pdf [Accessed 22 July 2010]. Shaharuddin, N.S. & Rashid, H.M., n.d. Factors influencing the decision to audit interim financial reports: empirical evidence of Malaysian public listed companies, [Online]. pp.1-15. Available at: http://www.globalresearch.com.my/main/papers/icber/PAPER_182_AuditInterimReport.pdf [Accessed 26 July 2010]. Shammari, B., 2008. Voluntary disclosure in Kuwait corporate annual reports. Review of Business Research, [Online] Available at: http://www.britannica.com/bps/additionalcontent/18/36047598/VOLUNTARY-DISCLOSURE-IN-KUWAIT-CORPORATE-ANNUAL-REPORTS [Accessed 26 July 2010]. Tadawul, 2010. All (market) – company list. Tadawul, [internet] 26 July. Available at: http://www.tadawul.com.sa/wps/portal/!ut/p/c1/04_SB8K8xLLM9MSSzPy8xBz9CP0os3gDAxN3D0NnN19nAzMPzxDDQEcDKND388jPTdUPTs3Tj9SPMo_3M3AOC_I0MTKwsAh0MTBycrL0MjHyNjLwN9cP0Y90AiqKxKuoINupyCJdUREAwM5NLg!!/dl2/d1/L0lJWmlncFJBL0lKaEFDRW9BREFqS0FBd0FLaXBpQUF3Qy9ZSTUwc2x5dHdBISEvN19OMENWUkk0MjA4OFFEMDJCQjlKNDJLMjBPNy9hY3Rpb25TdHJpbmcvbGlzdA!!/ [Accessed 26 July 2010]. Victoria, B. Madalina, P.C.Nicoleta, P.D. & Carmen, S., n.d. Voluntary internet financial reporting and disclosure - a new challenge for Romanian companies, [Online]. pp. 770-778. Available at:http://steconomice.uoradea.ro/anale/volume/2009/v3-finances-banks-and-accountancy/130.pdf [Accessed 26 July 2010]. Appendix 1 Table 1: Descriptive statistics for dependent and independent variables   Mean Standard Deviation Minimum Maximum Overall index 0.3415278 0.1519883 0.13 0.81 Firm Size 3.338794 0.7397538 1.86913 5.471006 Leverage 54.67792 70.73 0 398.51 Growth 0.311111 65.82335 -100 494.63 Return on Equity 9.906875 12.8156 -30.416 27.43 Table 2: Correlation among variables Variables Overall Index Size Growth Leverage Return on Equity Overall index 1.0000 Size 0.2869 1.0000 Growth 0.0102 0.2011 1.0000 Leverage 0.0123 0.4673 0.3178 1.0000 Return on Equity 0.2279 0.0852 -0.2615 -0.1825 1.0000 Skewness - 1.24356, Kurtosis - 4.14005 Appendix 2 Listed firms in Saudi Stock Exchange Abdullah Al Othaim Markets Advanced Polypropylene Company Limited Ahmed H Fitaihi Company Al-Ahsa Development Company Al-Babtain Power & Telecommunication Al-Jouf Agriculture Development Company Aldrees Petroleum & Transport Services Almarai Company Alujain Corporation Anaam International Holding Group Compan Arabian Cement Company Arabian Pipes Company Aseer Trading Tourism & Manufacturing Co Ash-Sharqiyah Development Company Eastern Province Cement Company Etihad Etisalat Company Fawaz Abdulaziz Alhokair Filing & Packing Materials Manufacturing Food Products Company Jarir Marketing Company Jazan Development Company Kingdom Hotel Investments Limited Makkah Construction & Development Company Middle East Specialized Cables Company Mohammad Al Mojil Group Company Mouwasat Medical Services Company Nama Chemicals Company National Agriculture Development Company National Gypsum Company National Industrialization Company National Metal Manufacturing And Casting Qassim Agriculture Company Red Sea Housing Sahara Petrochemical Company Saudi Arabia Fertilizers Company Saudi Arabian Amiantit Company Saudi Arabian Mining Company Saudi Automotive Services Company Saudi Basic Industries Corp. Saudi Cable Company Saudi Cement Company Saudi Ceramic Company Saudi Chemical Company Saudi Electricity Company Saudi Fisheries Company Saudi Industrial Export Company Saudi Industrial Services Company Saudi International Petrochemical Compan Saudi Kayan Petrochemical Company Saudi Mobile Telecommunications Company Saudi Paper Manufacturing Company Saudi Pharmaceutical Industries & Medica Saudi Public Transport Company Saudi Research & Marketing Group Saudi Steel Pipe Saudi Telecom Company Saudi Transport And Investment Company Saudia Dairy & Foodstuff Company Savola Group Southern Province Cement Company Tabuk Agriculture Development Company Tabuk Cement Company The National Company For Glass Industrie The National Shipping Company Of Saudi A The Qassim Cement Company Tihama Advertising Public Relations & Ma Tourism Enterprise Company United International Transportation Comp Yamamah Saudi Cement Company Limited Yanbu Cement Company Yanbu National Petrochemical Company Zamil Industrial Investment Company Appendix 3 Disclosure Index General Corporate Information 1 Brief History of Company 2 Description of organizational Structure 3 Statement of general objective 4 Statement of financial objective 5 Statement of marketing objective 6 Statement of social objective 7 Statement of major type of products Acquisition and Disposal 8 Discussion of future business opportunity of disposal 9 Financing details of the acquisition 10 Reasons for the disposal 11 Considerations received from disposal Financial Overview 12 Discussion of industry trend-past 13 Discussion of industry trend-future 14 Return on capital employed 15 Return on shareholders’ equity 16 Leverage ratios 17 Liquidity ratios 18 Cash flow ratios 19 Other ratios 20 Effects of interest rates on current results 21 Effects of interest rates on future results 22 Advertising information-qualitative 23 Advertising information-quantitative 24 Information on off balance sheet financing 25 Intangible assets valuation other than goodwill Research and Development 26 Company’s policy on R & D 27 Discussion on future R & D activities 28 Forecast of R & D expenses 29 New product development 30 Number of research personnel employed Future Prospect 31 Profit forecast- qualitative 32 Profit forecast- quantitative 33 Sales forecast - qualitative 34 Sales forecast-quantitative 35 Qualitative cash flow projections 36 Cash flow projections- quantitative 37 Forecast assumptions 38 Factors affecting future business- 39 Factors affecting future business 40 Index of selling prices 41 Index of quantity sales Employee Information 42 Employee appreciations 43 Equal employment policies 44 Break down of employees by line of business 45 Break down of employees by geographic area 46 Number of employees-full time and part time 47 Corporate policy on employee training 48 Amount spent on training 49 Number of employees trained 50 Discussion of employee turnover Social Reporting and Value Added Information 51 Environmental protection programme - qualitative 52 Environmental protection programme- quantitative 53 Description of community involvement 54 Value added statement 55 Value added ratios 56 General value added information Segmental Reporting 57 Capital expenditure by geographic region 58 Geographical production data - quantitative 59 Line of business production data - quantitative 60 Proportion of local production raw materials 61 Discussion of market share of products - general 62 Size, growth rate on product market 63 Discussion of competitors Foreign Currency 64 Long term debt by currency 65 Short term debt by currency 66 Discussion on impact of foreign currency 67 Major exchange rates used in accounts Capital Market Data 68 Stock exchanges on where shares are listed 69 Market capitalization at year end 70 Share price trend/behavior 71 Geographical distributions of shareholders Information about Directors 72 Name and age of directors 73 Academic qualifications of directors 74 Executive directors business experience 75 Non executive directors business experience 76 Directors affiliations with other organizations   Read More