Mandatory Financial Reporting Processes and Outcomes |
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Authors: | Matthew Bamber Kevin McMeeking Nikola Petrovic |
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Institution: | 1. Schulich School of Business, 111 Ian Macdonald Boulevard, Seymour Schulich Building, York University, 4700 Keele Street, Toronto, ON M3J 1P3, Canada;2. University of Exeter, Business School, Streatham Court, Rennes Drive, Exeter EX4 4PU, United Kingdom;3. Pontificia Universidad Católica del Ecuador, Facultad de Ciencias Administrativas y Contables, Avenida 12 de Octubre 1076 y Roca, Apartado, Postal 17-01-2184, Quito, Ecuador;4. Universidad San Francisco de Quito USFQ, USFQ Business School, Diego de Robles s/n y Pampite, Quito, Ecuador |
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Abstract: | In an extension to the mandatory financial reporting literature, we consider compliance and applicability as intermediate stages in the disclosure decision process, and investigate to what extent these measures explain any variance in the quantity of disclosure. We use financial instruments disclosures as our empirical context because of the level of complexity and diversity of the mandatory requirements. We find that neither applicability nor compliance show statistically significant association with disclosure quantity. By contrast we find that a firm's financial instruments management programme is an important determinant of both applicability and quantity. Finally, we demonstrate the economic consequences of applicability, compliance and quantity through their association with audit fees. For companies that use financial instruments management programmes to a greater extent, audit fees are higher. In contrast, the quantity of financial instruments disclosures appears to reduce audit fees. |
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Keywords: | Applicability Compliance Quantity Financial instruments Financial reporting Audit fees |
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