The Level of Financial Information Disclosure and Corporate Attributes In Developing Economy

Abstract

The attempts at improving the accounting systems and standards in developing countries are inadequate. Thus the purpose of this study is to measure the level of disclosure of accounting information in developing countries, with special reference to Nigeria and to determine whether some important corporate characteristics have any impact on the quality of disclosure in Nigeria. Approaches adopted for this study are: using structured questionnaire to obtain selected information items considered important and equally using Disclosure Index to define the level of disclosure on corporate annual reports of Nigerian companies. Then the association between the extent of disclosure and various corporate characteristics are examined using a multi-linear regression model. The study revealed that in disclosing mandatory items, the average score is high, whilst the average score for voluntary disclosure is unbelievably low. The findings also indicate that size, profitability, board composition, and market discipline variables are significant, and other variables such as age, complexity of business and asset-in-place are insignificant in explaining the level of disclosure. This study will contribute to the academic literature, showing that the existence of a close monitoring system by regulatory authorities brings the potential for high compliance regarding disclosure and transparency, at least in mandatory cases. This study would be a good example for other developing countries, wanting to learn how Nigerian companies achieved this high level of compliance in mandatory disclosure.

Key Words: Developing countries, Disclosure Index, Profitability, Transparency