The effect of legislation on corporate disclosure practices

Abstract

This article investigates the effect of the Financial Reporting Act of 1993 (FRA) on mandatory disclosure practices of companies listed on the New Zealand Exchange Limited. The FRA gave statutory backing to financial reporting standards in New Zealand and made non-compliance illegal. Using both univariate and multivariate analyses, we examine the association between (a) the levels of compliance with mandatory disclosure by the companies in our sample, and (b) disclosure regulatory regimes that prevailed in New Zealand before and after the implementation of the FRA. We find that mean corporate disclosure compliance levels in the periods after the enactment of the FRA are significantly higher than those in the periods before the enactment of the legislation. After controlling for the effects of other mandatory disclosure-related variables documented in prior studies, we also find that the improvement in corporate disclosure compliance behaviour is the result of the implementation of the FRA. Alternative specifications of the primary regression model indicate that those findings are robust.

Transition to IFRS and compliance with mandatory disclosure requirements: What is the signal?

“…17 Two more types of OLS regressions have also been conducted: one with using the actual (untransformed) compliance score as the dependent variable (e.g. Mangena and Tauringana, 2007;Alsaeed, 2006;Akhtaruddin, 2005;Owusu-Ansah and Yeoh, 2005;Ali et al, 2004;Glaum and Street, 2003;Tower et al, 1999); and one which uses the natural logarithm of the compliance score as the dependent variable (i.e. a log-lin model, cf.…”

Disclosure Level And Compliance With IFRSs: An Empirical Investigation Of Kuwaiti Companies

“…Considering mandatory disclosure studies, Wallace et al (1994) concluded that size, either measured by total assets or by total sales, is an important variable associated with level of disclosures. Also, company size as measured by total assets was found significantly associated with level of disclosures by Wallace and Naser (1995), Owusu-Ansah (1998), Ali et al (2004), Owusu-Ansah and Yeoh (2005), Al-Shammari et al (2007). On the other hand Ahmad and Nicholls (1994), Street and Gray (2002), and Glaum and Street (2003) found no association between company size and level of disclosures.…”

“…The first category includes studies that test the association between corporate characteristics and mandatory disclosures (e.g. Wallace and Naser, 1995;Owusu-Ansah, 1998;Street and Gray, 2002;Glaum and Street, 2003;Owusu-Ansah and Yeoh, 2005;Al shammari et al, 2007). The second category includes studies that test the association between corporate characteristics and voluntary disclosures (e.g.…”

Continuous disclosure compliance: does corporate governance matter?

“…However, after controlling for turnover and number of slow trading days, the reform has no impact on information-based trading. Using a larger sample dataset over the period 1998 to 2001, Hsu et al (2012) document that analysts' forecast accuracy and dispersion improved after both 6 Prior New Zealand disclosure research only focus on voluntary disclosure in interim or annual reports, or earnings-related disclosure or management earnings forecasts (Bradbury, 1992;Hossain et al, 1995;Owusu-Ansah and Yeoh, 2005;Huang et al, 2009;Wong and Wong, 2010;Dunstan et al, 2011). 7 There is little evidence that compliance with the continuous disclosure requirements was effectively enforced by either regulatory authorities or shareholders until the Southcorp case in 2003 (North, 2010).…”