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1999
An empirical investigation of the quality of disclosure in corporate financial reports in developing countries: the case of Iran Soheila Mirshekary University of Wollongong
Recommended Citation Mirshekary, Soheila, An empirical investigation of the quality of disclosure in corporate financial reports in developing countries: the case of Iran, Doctor of Philosophy thesis, Department of Accounting and Finance, University of Wollongong, 1999. http://ro.uow.edu.au/theses/1014
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AN EMPIRICAL INVESTIGATION OF THE QUALITY OF DISCLOSURE IN CORPORATE FINANCIAL REPORTS IN DEVELOPING COUNTRIES: THE CASE OF IRAN
A thesis submitted in fulfilment of the requirements for the award of the degre
DOCTOR OF PHILOSOPHY From
THE UNIVERSITY OF WOLLONGONG New South Wales, Australia
By
SOHEILA MIRSHEKARY B.S. in Accounting (Iran, Alzahra University), M.A. in Accounting (Iran, University of Tehran)
DEPARTMENT OF ACCOUNTING AND FINANCE September, 1999
ACKNOWLEDGEMENTS I am grateful to almighty Allah who gave me the opportunity to complete this thesis amidst many difficulties. I wish to extend my special acknowledgment and sincere thanks to Professor Michael Gaffikin who supervised me through the period of this research and gave me a lot of freedom of thinking and working which enabled me successfully to complete this thesis. I also wish to express my sincere gratitude to Ken Russel who gave me valuable and helpful comments, suggestions and guidance during the statistical and analytical stages of the thesis.
I would like to thank all academic and staff members in the Department of Accounting and Finance (Professor David Johnstone, Associate Professors Michael McCrae and David Edelman, Dr. Barbara Corneilis, Ms. Maureen Tadd, Ms. Cynthia Frew and Ms. Tina Mak) for assisting me with questionnaire design, statistical techniques, and administrative needs which were also vital to this thesis. I would like to thank and appreciate Mr. Fatemi, director boards and the other staff members of the Audit Organization, and Mr. Sirous Rahmani for helping me with questionnaire distribution and data collection and my best friend Ms. Shahnaz Niaamati for collecting research
materials and data whenever required. I also thank all my friends and those individua
who gave me lots of emotional support and gave up their valuable time to complete the questionnaires during the period of my stay in Iran for data collecting.
I acknowledge the financial assistance received from the Ministry of Culture and High Education, which enabled me to undertake this thesis, the Iranian Government which gave me this opportunity as a woman, Dr. Daneshjou who made it possible for me to iii
undertake m y research study, and the Alzahra University for granting m e leave to pursue this research.
I grateful acknowledge the continuous emotional support I received from my parents from the first stage of my study life to now, and other members of my family who encouraged me to pursue my further study. Furthermore my special thanks and love to my husband Ali who has supported me and sacrificed a great deal for the success of my research, my seven years old son Nima, who gave me enormous joy and pleasure and had to forebear my lack of constant
attention, and finally my little boy Sina for unfailing patience and cooperation with during the pregnancy and early childhood period. Special thanks to them.
iv
ABSTRACT A considerable amount of research has been done with regard to classification and
explanation of the diversity of accounting practices across countries. There is a need f an approach to accounting in the Third World that is different from that of the industrialized nations. The attempts to improve the accounting systems and standards in developing countries are inadequate. The purpose of this thesis is to measure the level of disclosure of accounting information in a developing country (Iran) and to determine whether some important corporate characteristics have any impact on the quality of disclosure in Iran.
Two approaches were used in this study for determining user groups' perceived importance of the selected information items through a structured questionnaire and defining the level of disclosure on corporate annual reports of Iranian companies through an unweighted disclosure index. The scoring sheet index was applied to 62 corporate annual reports for years ending between 20 March 1995 and 21 December 1996. Then the association between the extent of disclosure and various corporate characteristics were examined using a multiple linear regression model. Those characteristics were company size, the degree of government ownership, profitability, liquidity ratio, type of business, share price fluctuation, time lag, and audit firm.
The results show that there is consensus between institutional investors and bank investment officers about the perceived importance that they attached to sources of information. In regard to the degree of consensus among user groups, the results of an item-by-item examination show that combinations of bank loan officers, tax officers, v
and auditors with the other user groups have a weak level of consensus about 81 information items.
The average (mean) level of overall disclosure between sample companies was 62 per cent, with a range between 36 per cent and 72.5 per cent. The results also indicated that there is a high association between the actual disclosure of information items and the rankings of two groups of users (auditors and tax officers). The association between actual disclosure and the rankings of bank investment officers, bank loan officers, corporate investors, and stockbrokers was very low.
The analysis of the regression model showed that there is a significant association between the extent of disclosure and liquidity. The results suggest that audit and liquidity were both associated significantly with the extent of disclosure in corporate annual reports in Iran. The percentage of government ownership had less significant impact (p. oU_-! ^ j ^ «_iU*l 4, oJu-j 0-4*- jj -oLiw.^ tfVwIi jt t+j j _U juty: U__f ^ >a
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Soheila Mirshekary Department of Accounting & Finance, University of Wollongong, NSW, Australia. Tel: 0061-42-213045 Fax:0061-42-214297
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