To What Extent Organizations of Qatar Disclose Their Annual Report Voluntarily - Literature review Example

Research Paper The journal has tried to showcase up to what extent listed organizations of Qatar disclose their annual report voluntarily. The journal has taken up a significant structured approach where the topic has been analyzed in a step by step fashion with the help of primary research. Introduction The selected journal has explored recent trends of voluntary disclosure of the annual reports in the context of emerging countries. Here in this journal researchers have wanted to describe that in Qatar, public list companies are coming up with new trends in the case of annual report disclosure. Through this journal the researchers have tried to describe that disclosure of annual reports is a significantly important matter for organizational accounting. Annual report is the primary source of information on which shareholders are significantly dependent upon. The researchers have chosen this topic suitably due to the high level of importance associated with the topic. Organizational transparency is an old issue for the Qatari organizations. Under such circumstances this journal can be a guiding star to analyze the transparency situation in the Qatar market. Annual report is the mirror of organizational performances. With the help of this journal the researchers have tried to the study the level up to which listed organizations in the Qatar market are coming up with their annual report in a voluntary manner. The summary will critically analyze this journal. The summary will be conducted in step by step fashion. With the help of this project readers will be able to understand the voluntary efforts from the side of Qatari organizations to disclose their annual report. Literature Review In this section the researchers have tried to indicate that organizational corporate disclosures are significantly dependent upon various kinds of factors. Those factors are size of the firm, risk associated with business and growth of the organizations. In this portion of the journal all these factors have been selected because on the basis of these factors annual reports are being disclosed voluntarily. The selected journal has rightly indicated that as the organizational sector changes level of disclosure also changes. 31 listed organizations of UAE have been chosen for this report to analyze the UAE context. Those 31 organizations belong to the various sectors or industry. In the journal selected sectors are banking, industrial, insurance, and service. To understand the situation of different sectors three underlying factors have been analyzed. Those underlying factors are size, profitability and debt to equity ratio. The journal has focused towards the firm specific characteristics also. In this context references have been taken from the context of Saudi Arabian market also. In this case also one thing has been clear that firm size has significant impacts on the annual report disclosure of the companies. The study has categorically indicated that factors like debt, ownership dispersion, age, profit margin, industry and audit are not at all highly related with the voluntary disclosure of the annual report. All these factors are negatively associated with the corporate social disclosure. That means this section of the journal has significantly explained the required factors for the voluntary disclosure of annual reports. The literature review part in this journal has tried to make an interaction between compulsory disclosure and the voluntary disclosure in the annual report. For that reason it has chosen Saudi Arabian context. For the purpose of this study both listed and non listed companies have been chosen to evaluate this interaction. All the interactions have been analyzed on the basis of separate disclosure indices. Those several disclosure indices are closely related with both voluntary and compulsory disclosures. During the course of this journal one thing has become clear that, there is significant positive correlation between voluntary and mandatory disclosure. Within this journal Indian context also have been analyzed. That means the researchers have wanted to conduct this research in an extensive fashion. Being a developing country selection of Indian context for the purpose of literature review is highly appropriate and proper. The Indian context has been used in this journal to showcase the empirical evidences. This portion of the literature review has categorically indicated that, in case of Indian banks voluntary disclosures of annual reports are on the higher level (Kumar, 2014, pp. 45-48). That means Indian banks shows their annual reports voluntarily. This empirical investigation has been significantly advantageous for conducting the similar kind of research in this journal. The study has once again disclosed that sizes and assets base is significantly important deciding factors for the disclosure of annual reports. It has once again reinforced that all the other variables like age, board composition, diversification, multiple exchange listing and complexity of business are not significant for the disclosure of Annual report (Kuada, 2012, pp. 89-91). The researchers have included Chinese context also into this journal. With the help of Chinese context, the researchers have tried to establish some factors which may be suitable in the context of Qatar also. In the Chinese context it has been observed that factors are somewhat different than the other contexts. In case of Chinese context several factors are significant for voluntary disclosure of annual report. Those variables are proportion of governmental ownership, foreign ownership, firm’s return on equity and reputation of the organizational auditor. The Chinese context is somewhat different than the Saudi Arabian and Indian context. In the literature review part of the selected journal, Malaysian context also has been discussed to get the idea about Qatar situation. Malaysian context has been analyzed on the basis of 65 items and for analyzing those items un-weighted disclosure index has been created. The result of the study has shown that corporate governance and extent of voluntary disclosure are positively correlated with each other in Malaysian context. That means Malaysian context has indicated one more new factor related with the extent of voluntary disclosure of annual report. The literature review part has also included ASEAN context where, corporate annual report disclosure practices have been analyzed. That analysis has been done on the context of five countries like Singapore, Malaysia, Indonesia, Philippines and Thailand. The literature review part of the journal has categorically indicated that for these different countries extent of voluntary corporate disclosure practices related with annual report are also different. Research Objectives and Research Questions The main objective of this research by this journal was to find out what are the factors that determine whether the firm will indulge in the voluntarily disclose in their annual reports or not. The disclosure of financial information in annual report has been a key area of research by top academicians of both developed and developing countries. However this area of research has remained neglected for the companies located in the Middle East. Actually annual report forms a major portion of financial disclosures because it is the most widely distributed financial information about the company. However, voluntary disclosure in annual report involves much more than mere publication of financial results in the annual report. It involves disclosing of managerial incentives and other related information in addition. In this respect it has come to be debated in the respect of the question how much is fair to be disclosed and what the things that should be disclosed are. While the society always demands more disclosure and more fairness, the ethical question of benefits vs. cost of disclosure always remains. This dilemma leads to partial disclosure at sometimes to no disclosure at all at other times. With the view of the question of information asymmetry and resultant problems arising thereof, the voluntary disclosure in the annual reports is vouched for. It is argued that voluntary disclosure in the annual report will bring in more gain through information economics. In this research the authors of the journal very aptly analyses the amount of disclosure in the annual reports of the company to factors such as age, size, complexity, asset in place, etc. While going for the research the researchers have developed a list of 44 voluntary items and multiple regression analysis is performed to analyze the relationship of this different items with the factors mentioned above that is age, size, complexity, etc (Hossain and Hammami, 2009). The researchers in their research have relied on journals and other online sources to validate their research and to perform their research. The researchers through their study have successfully demonstrated that factors such as age, size, complexity, asset in place, etc., does not affect the amount of disclosure made by the company in particular. They have also found that Qatari companies indulge in disclosure in their annual reports in general which has led to investor confidence in the companies of the region. Research Design The aim of this research was to find out the amount of the disclosures made in the annual report by the companies that have their operation base in the Qatar financial market. The researchers tried to find out how the 44 different factors of disclosures were related to company specific factors such as age, size, place, complexity etc. and other industry specific factors. The researchers have in their research 1st accessed a huge collection of academic materials available on this matter. From that source they have accessed the huge no. of academic researches that is already existent in this field of research particularly in developing and developed countries. They have found out through their research that although a huge amount of research has taken place in this context in the financial literature of developed and developing countries, any research in this field is absent specially in case of countries registered in the Qatar region (Ghauri and Grönhaug, 2005). Then they have analyzed the environment of corporate reporting in Qatar to find out what is the accounting standard and practices that is followed by the companies registered in the area. A sample of 42 companies was selected for the research and a list of 44 different items was selected to find out the relationship between them. Data collection and analysis In this selected journal the researchers have collected their data through sampling method. For conducting this research 25 organizations which were listed before 2006 in the Doha Stock market have been chosen for the data collection. The study has included 2007 annual reports of the organizations. Two major criterions for selecting the organizations are annual reports of the organizations must be available at the stock exchange or company web sites or can easily be collectable from the company. Other criterion is that the organization must be listed with the stock exchange before 2006. In the data collection portion 25 organizations have been divided into 4 main categories (Flick, 2011, pp. 56-58). Those categories are insurance sector; banking and financial sector; industry sector; and service sector. 60% organizations from each of the sector have been represented in the survey. This kind of cohesive representation has made the data collection generalized for the organizations selected for the research. It has been noticed that annual reports were asked from the 25 organizations with the help of mail and email. But all the respondents did not provided their annual reports on the basis of requesting mails and emails only. The researchers got those annual reports with the help of two follow up mails. All the above discussions and data collection procedures are indicating that, in this journal data collection has been significantly extensive and appropriate in nature. The sampling procedure for this particular case is highly suitable with scope of the research. Analysis For the analysis of the of the research objective that is the amount of voluntary disclosure by different companies in their annual report and what are the factors that influence the disclosure in the annual reports is studied. For their study the researchers had decided to research on a sample of 42 companies and 44 factors were chosen for analysis in each of the companies. The researchers decided to form hypothesis of the factors and then to check the hypothesis against available facts (Cooper, 2003). For example the Hypothesis they developed for the age factor was longer and more established firm were more likely to disclose more information than a younger firm in comparison. For the size factor the developed hypothesis was that the size of the firm is directly proportional to the amount of information the company chooses to disclose. They also formed the hypothesis that the level of disclosure was directly related to the profitability of the firm and its complexity as well. A regression analysis was performed to find the relation between the factors that the researchers thought contributed to disclosure of voluntary information and its actual scenario. Conclusion The aim of the researchers in this particular research was to find out what are the factors that influence voluntary disclosure in the annual report. For their research the researchers choose a sample of 42 different firms and a list of 44 different factors. Their main aim was to find out a relationship between the factors and the disclosure practices. For the research they relied greatly on a variety of sources including primary data, secondary data, academic materials etc. Through their research they tested their hypothesis of 5 different factors. They tested 5 hypothesis based on multiple regression and correlation analysis. They have concluded through their research that factors such as age, size, complexity, asset in management do not have significant relation with the amount of disclosure made. They have found that the amount of disclosure depends on the beliefs of investors and founders of the company as to whether they consider disclosure to be more beneficial or consider disclosure to be more harmful. That is if they analyze the cost benefit of disclosure vs. the economic cost the company will disclose if they find greater benefits as compared to costs. References Cooper, R., 2003. Business Research Methods. New York: McGraw-Hill. Flick, U. (2011). Introducing research methodology: a beginners guide to doing a research project . California: SAGE. Ghauri, P., and Grönhaug, K., 2005. Research Methods in Business Studies. London: Prentice Hall Hossain, M., and Hammami, H. (2009) Voluntary disclosure in the annual reports of an emerging country: The case of Qatar : The journal of Advances in Accounting, incorporating Advances in International Accounting. 25. pp. 255-265. Kuada, J. (2012). Research methodology: a project guide for university students. London: Samfundslitteratur. Kumar, R. (2014). Research methodology: a step-by-step guide for beginners. California: SAGE. Read More