Developments in non-mandatory disclosures in annual reports of companies: a case study

Abstract

Abstract:The paper investigates the extent of non-mandatory disclosure of information (NMD) in the annual reports of the 17 companies listed on the South Pacific Stock Exchange (SPSE) in Fiji, a developing country, and whether NMD by these companies has changed over time providing additional and useful information to stakeholders. The empirical data was gathered from the years 2008 to 2010 to provide a clear picture of the change in the level and extent of NMD, and its influences over the periods 2008 to 2010. It can be seen from the Fiji perspective that the mandatory requirements tend to have a financial focus. However, it would be expected that the level of company disclosures would have changed over time, with not only global market forces but through differing societal values which have increased the frequency and demand of non-mandatory reporting by companies. All companies showed some degree of NMD, and on average this demonstrates an increasing trend. The stakeholders are receiving more information about a company's activities. The companies were analysed in light of recent developments in corporate governance by the Capital Markets Development Authority (CMDA) implementing their 10 corporate governance principles. This became a major driver of the increase in NMD levels of the disclosures in the annual reports of the listed companies. However, a large variation still exists between the level and extent of the NMD and the different listed companies. The minimum disclosure level found over the three years was 9.09 percent, which has increased to a minimum of 13.66 percent in 2010, and the maximum disclosure level over the three years was 81.82 percent. The findings for the extent of NMD was also similar where the minimum words used in NMDs was 114, increasing to 854 in 2010, and the maximum disclosure extent over the three years was 21,414 words. However, it was found that the measurement of counting words tended to fluctuate over different periods where significant events took place that affected the company. Therefore, it was established that disclosure is impacted by what happens in the reporting period, and can explain why one period may have greater disclosure than another.

Development of accounting in Fiji, 1801–2016

“…The main area of development was in the standardisation of auditing and accounting. Increasingly, the standards labelled international, particularly the IFRS, have been adopted, driven by multinational enterprises, international accounting firms and international financial bodies (or supranational organisations) operating in Fiji as an adjunct to their main operations overseas (Chand and White, 2007; Sharma et al, 2013). Between 1999 and 2001, the FIA Accounting and Auditing Standards Committee, in conjunction with the government, completed a comparative review of IFRS and the 28 FAS.…”

“…The close ties between IFRS and standard Fijian practices have attracted criticism. Chand and White (2007) claim that the adoption of IFRS in Fiji has ignored country-specific issues such as the nature of industry, size of business enterprises and sophistication of the capital markets (see also Sharma and Davey, 2013; Sharma et al, 2013). They charge the FIA and the Fiji Government with ignoring the needs of local users of accounting information.…”

Accounting and Accountability in Fiji: A Review and Synthesis

“…Sharma et al. () argue that the trend toward voluntary disclosure practices in Fiji has shown significant improvement. Corporate governance principles became a major driver for the increase in voluntary disclosure in the annual reports of listed companies.…”

Climate change accounting: the challenge of uncertainty in Pacific Islands

“…It is argued that organisations that have integrated climate change into their strategies are likely to be well positioned and have greater shareholder and stakeholder value compared to those organisations that are poorly positioned Sharma, Low & Davey, 2013).. While to date climate change is not very high on the agenda of many organisations, yet there is a feeling among many that it is important and is here upon us to stay indefinitely and companies worldwide need to do a lot more.…”