The Impact of Firm Specific Characteristics on Voluntary Disclosure in Corporate Annual Reports - Research Paper Example

The paper "The Impact of Firm-Specific Characteristics on Voluntary Disclosure in Corporate Annual Reports" is an excellent example of a research paper on finance and accounting. This study explores the extent and levels of voluntary disclosures in the annual reports of the GCC countries, emerging countries, and UK listed firms. The data are collected from listed companies in the stock market of a representative group of GCC countries and London Stock Exchange (LSE) to test research hypotheses related to the association between company characteristics and the voluntary disclosure dissemination of financial information on the annual reports based on industry type and country.  The main thrust of this study is to 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 reporting voluntarily disclosed by 492 industrial financial companies listed in the GCC stock market and selected a representative sample (492 firms) from industrial financial companies listed in the London Stock Exchange (LSE). The disclosure checklist consisting of 67 voluntary items of information is developed and statistical analysis is performed using multiple regression analysis. The result shows that all of the firm-specific attributes used in this study are significantly related to the level of voluntary disclosure.

1        Introduction

It has been very apparent that companies nowadays want to be part of the global market; thus they need more knowledge on the complexity of the environment. Because global companies attract more investors, they are voluntarily disclosing information for the investors’ satisfaction (Schuster & O’Connell, 2006, p. 1). Although voluntary disclosure is not required, it has been the strategy of companies to have their clients become more aware and benefitting (McNeil & Brian, 2007, 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 gained importance when the Environmental Protection Agency (EPA) issued an audit policy for a company’s compliance (Perlman, 2009, p. 88).