Introducing More IFRS Principles of Disclosure – Will the Poor Disclosers Improve?
Other authors
Publication date
2018ISSN
1744-9480
Abstract
The current paper was prepared for the International Accounting Standards Board (IASB) Research Forum 2017 and evaluates the effects of introducing more principles of disclosure as part of the IASB Disclosure Initiative. We perform a literature review of academic research on how entities have complied with disclosure requirements in the past. The review shows high levels of non-compliance and high volatility across entities, including poor disclosers being far below the average. We find no clear pattern of higher compliance for International Financial Reporting Standards (IFRS) with more reliance on disclosure principles as compared to specific requirements (i.e. IFRS 7, IFRS 8), but note the methodological problem of measuring compliance with disclosure principles. Academic research suggests that the degree of compliance depends on entities’ incentives for providing or withholding information in combination with local conditions for primary users, auditors and regulators. Based on our review, we argue that increased reliance on entities to act in ‘good faith’ when complying with disclosure requirements, in capital-market contexts where entities may be in high-incentive situations and have low costs of non-compliance, is potentially risky in terms of how well the Standards protect primary users from poor disclosers. More emphasis is needed on ensuring that the disclosure requirements are enforceable and auditable in order to secure a certain minimum level of disclosure.
Document Type
Article
Document version
Published version
Language
English
Keywords
IFRS
Pages
80 p.
Publisher
Routledge
Is part of
Accounting in Europe
This item appears in the following Collection(s)
Rights
© L'autor/a
Except where otherwise noted, this item's license is described as http://creativecommons.org/licenses/by-nc-nd/4.0/