An investigation of voluntary disclosure by Kuwaiti Shariah‐compliant companies

Abstract

Purpose -The purpose of this study is to measure the extent of voluntary disclosure in the 2009 annual reports of 108 Shariah-compliant companies listed on the Kuwait Stock Exchange. The study aims to investigate three categories of voluntary disclosure: overall, conventional and Islamic disclosure. Design/methodology/approach -Voluntary disclosure was measured using a self-constructed index consisting of 132 items overall, 86 for conventional and 46 for Islamic information items. Annual reports were analyzed using descriptive statistics and t-tests. Findings -Results suggest that the mean overall voluntary disclosure by Shariah-compliant companies is 15 percent, but 17 percent and 13 percent for the conventional and Islamic items, respectively. Voluntary disclosure of conventional items is comparable to extant studies, and higher than Islamic items.Research limitation/implications -The study uses annual reports from 2009 because they were the most recent data available on the listed companies at the beginning of the study. Since this study was undertaken before the Shariah Advisory Council of the Capital Market Authority was established on January 1, 2012, this imposes a limitation. Future study should replicate this study to assess differences with the existence of the Council. Practical implications -The findings provide evidence that Shariah-complaint companies lack voluntary disclosure, especially Islamic disclosure information. As a result, the findings should be useful to lawmakers in Kuwait for improving overall disclosure practices by Shariah-compliant companies. Preparers may use the findings to match the amount of information in their annual reports with other companies to ensure capital sourcing. Investors may use the findings for understanding disclosure behavior of Shariah-compliant companies in Kuwait. Such findings may assist them to diversify investment portfolios. Originality/value -This study contributes to extending the Kuwaiti literature on disclosure, and fills a gap in empirical studies on Shariah-compliant disclosure practices.

The Extent and Determinants of Voluntary Disclosures in Annual Reports: Evidence from Banking and Finance Companies in Sri Lanka

“…Due to this deficiency in disclosures investors and other stakeholders cannot measure value of the company and what, investors can earn by investing particular company. And Lack of voluntary disclosure by companies could be attributed to absence of encouragement and pressures from stakeholders (Al-Shammari, 2013). Therefore, those who are responsible for the corporate reporting should consider about the elements which have lacking disclosure level and should take necessary actions to improve those areas to give better output to the all stakeholders.…”

“…Voluntary disclosure index is developed, based on the indexes adopted and developed by Bhasin et.al. 2012;Ismail and El-Shaib 2012;Al-Shammari 2013;Haji and Ghazail 2013;Ho andTaylor 2013 andCharumathi andRamesh 2015. Therefore the items are added based on those studies to provide empirical support of the index and each element is checked to eliminate the mandatory disclosures from the index. By considering all items are equally important this study used unweighted approach to score the items in disclosure index 1989;Hossain et.al., 1994;Wallace et al, 1994;Naser et.al.…”

“…Studies such as Naser et.al 2002;Barako et al 2006;Ousama and Fatima;2010;Al-Shammari, 2013 identified the level of voluntary disclosures and Studies such as Cerf 1961;cooke 1992;Ahmed and Nicholls 1994;Wallace et.al.1994;Meek et.al. 1995;Inchausti, 1997;Naser et.al.…”

Corporate Ownership, Internet Penetration and Internet Financial Reporting: Evidence from the Gulf Cooperation Council Countries

“…The objective of financial reporting in the modern business environment is to assemble financial information that is useful to existing and potential investors, lenders, creditors and other users for making decisions about providing resources to a company (Al-Shammari, 2013). Rapid developments in information and communication technology have led organisations in many countries to consider the impact of the Internet on the delivery and dissemination of business information (Beattie & Pratt, 2003;Jones & Xiao, 2004).…”

Financial Risk Ratios and Earnings Management: Reducing Uncertainties in Shariah-compliant Companies

“…Positive developments can be explained further by the argument that the basis for civilized behavior can affect changes in accountability and morality (Al-Shammari, 2013;Durant, 1950;Schelling, 1968). Shariah has set the proper and appropriate behavioral code of conduct for Muslims, including accountability in business dealings and transactions.…”