The impact of IFRS 7 on the significance of financial instruments disclosure

Abstract

Purpose -The main aim of this paper is to investigate Financial Instrument (FI) disclosures provided by Jordanian listed companies under IFRS 7 as compared to those supplied under IAS 30/32.Design/methodology/approach -A sample of 82 Jordanian listed companies is used in this monograph. A disclosure index checklist was constructed to measure FI information provided by the sample companies.Findings -The study finds that a larger number of Jordanian listed companies provided a greater level of FI-related information after IFRS 7 was implemented. Specifically, the sample firms provided 47% of the disclosure index items after implementing IFRS 7 as compared to 30% under IAS 30/32. In addition, an analysis of FI disclosure by industry revealed that the highest level of disclosure was provided by firms in the banking sector.Moreover, the analysis of FI disclosure pre-and post-the implementation of IFRS 7 revealed specific aspects of usefulness. In particular, some components of FI disclosure (Balance Sheet and Fair Value) showed no significant differences within and across sectors post the implementation of IFRS 7 suggesting that the new standard may have enhanced the comparability of such information. Research Limitations/implications -The results of the current study have a number of implications for policy-makers. First, they provide a great deal of insight for the IASB about the relevance of its standards to countries outside the Western context. In addition, 2 the findings provide valuable insights for policy-makers in Jordan who are concerned about the implications of mandatory disclosures.Originality/value -The analysis of FI disclosure in developing countries in general, and in Jordan in particular, has been overlooked by the extant literature and therefore this study is the first of its kind to examine this research issue for a sample of Jordanian firms.

Introducing More IFRS Principles of Disclosure – Will the Poor Disclosers Improve?

“…For specific standards, the results may be even lower, e.g. 49% and 40% compliance with IFRS 7 requirements in Jordan 2007 (Tahat et al, 2016) and Malawi 2009 (Tauringana & Chithambo, 2016), respectively. The lower bound (poorest disclosers) are in many cases 10-20 percentage points below the average compliance level (46% is the average lower bound of the studies covered).…”

“…The first group gathers studies dealing with the adoption of and compliance with IFRS (or national GAAP) disclosure requirements in Bahrain (Juhmani, 2017); Bangladesh (Akhtaruddin, 2005;Hasan, Karim, & Quayes, 2008); China (Gao & Kling, 2012;Peng, Tondkar, van der Laan Smith, & Harless, 2008;Xiao, 1999); Egypt (Abd-Elsalam & Weetman, 2003;Dahawy, Merino, & Conover, 2002;Hassan, Giorgioni, & Romilly, 2006;Hassan, Romilly, Giorgioni, & Power, 2009;Samaha & Abdallah, 2012); Ghana (Assenso-Okofo, Ali, & Ahmed, 2011); Jordan (Al-Akra, Eddie, & Ali, 2010); Kenya (Bova & Pereira, 2012); Malaysia (Abdullah, Evans, Fraser, & Tsalavoutas, 2015;Che Azmi & English, 2016); Saudi Arabia (Naser & Nuseibeh, 2003); Turkey (Çürük, 2009;Mısırlıoglu, Tucker, & Yükseltürk, 2013) and Zimbabwe (Chamisa, 2000). The second category includes studies of business combinations in China (Taplin, Zhao, & Brown 2014); financial instrument disclosures in Malaysia (Othman & Ameer, 2009), Egypt (Mokhtar & Mellett, 2013), Jordan (Tahat, Dunne, Fifield, & Power, 2016) and Malawi (Tauringana & Chithambo, 2016); presentation of financial statements (IAS 1) in Malaysia (Rahman & Hamdan 2017); income taxes in Egypt (Ebrahim & Fattah, 2015). The third category includes general disclosure compliance studies covering Bahrain, Oman, Kuwait, Saudi Arabia and United Arab Emirates (Al-Shammari, Brown, & Tarca, 2008); Bangladesh, India and Pakistan (Ali, Ahmed, & Henry, 2004); Malaysia, Philippines and Thailand (Taplin, Tower, & Hancock, 2002); 7 and one study of Islamic banks in Bahrain, Qatar, Jordan, Syria, Sudan, Yemen and Palestine …”

“…One example is the paper by Tahat et al (2016) that investigates financial instrument disclosures under IFRS 7 as compared to those under IAS 30/32 for a sample of Jordanian companies. Their results show an increase in compliance following adoption of IFRS 7, although still far from full compliance, and the authors point at the need for stringent enforcement measures to ensure full compliance with accounting standards.…”

Hedging Practice In Russia: Problems And Prospects

“…However, studies by many authors, notably Li, Sougiannis, and Wang (2017), Chang, Donohoe, and Sougiannis (2016), Gumb, Dupuy, Baker, and Blum (2018), Schwarzbichler, Steiner, and Turnheim (2018), testify to information advantages of formation of financial statements under IFRS for the purposes of management of financial instruments on the basis of increase of prognostic value of reporting information. For example, research by Tahat, Dunne, Fifield, and Power (2016) on companies operating in Jordan showed that as a result of https://doi.org/10.15405/epsbs.2020.03.96 Corresponding Author: E. E. Popova Selection and peer-review under responsibility of the Organizing Committee of the conference eISSN: 2357-1330 672 the application of IFRS in the preparation of financial statements, they have achieved a higher level of disclosure of financial activities, especially from the application of IFRS 7.…”

A longitudinal analysis of financial instruments disclosure in an emerging capital market: the case of Qatar

“…In terms of developing countries, empirical studies on FI disclosure are very scarce (Hassan et al, 2006a). Exceptions to this include some studies conducted in Malaysia (Hassan et al, 2006b), the Czech Republic (Strouhal, 2009), Brazil (Murcia and Santos, 2010) and Jordan (Tahat et al, 2016). The results revealed that although firms provided FI-related information, there was a great deal of variation in the information provided, as compared to the IASB's standards such as IAS 32, IAS 39 and IFRS 7.…”