Problems of users’ perception of financial statements according to international standards
DOI:
https://doi.org/10.21638/spbu18.2022.301Abstract
Goal: identify and evaluate the factors that significantly affect the current assessment by representatives of the business environment of the quality and functionality of reporting generated by management in accordance with international financial reporting standards, in terms of increasing the clarity, simplifying and reducing current reporting to improve its perception by users.
Methodology: the applicable methodology included general scientific methods of cognition, including analysis and synthesis, and expert assessments. The main results were obtained using factorial and multivariate analysis tools.
Findings: the results of the tests performed are statistically significant and indicate against the null hypothesis. A significant part of the reporting information is difficult to fully understand by investors and representatives of other groups of interested users who ambiguously assess the feasibility of simplifying and reducing current reporting in order to increase its consumer value.
Originality and contribution of the author: the basis of the study is a statistical analysis of current primary data obtained during a survey of representatives of the business environment. The theoretical significance of the results obtained lies in the refinement of the structure and assessment of factors influencing the quality of perception by users of corporate reporting information prepared by management in accordance with international financial reporting standards. The practical significance of statistically justified conclusions about the importance of adjusting the level (adaptation) of the complexity of standards and disclosures to improve the consumer characteristics of financial statements generated by management is determined by the possibility of their use in management practice to improve the efficiency of information support for investors and improve the corporate governance system.
Keywords:
information support, problems of qualitative assessment of corporate reporting, complexity of reporting perception, IFRS, consumer properties of reporting
Downloads
References
Bloomfield R. J. 2008. Discussion of “Annual report readability, current earnings, and earnings persistence”. Journal of Accounting and Economics 45 (2–3): 248–252.
Brown S., Hillegeist S. 2007. How disclosure quality affects level of information asymmetry. Review of Accounting Studies 12: 443-477.
Burgstahler D. I., Dichev I. 1997. Earnings management to avoid earnings decreases and losses. Journal of Accounting and Economics 24 (1): 99–126.
Biddle G., Hilary G., Verdi R. 2009. How does financial reporting quality relate to investment efficiency? Journal of Accounting and Economics 48: 112-131.
Cheng L., Liao S., Zhang H. 2013. The Commitment Effect versus Information Effect of Disclosure—Evidence from Smaller Reporting Companies. The Accounting Review 88 (4): 1239-1263.
Chung Y., Hrazdil K., Novak J., Suwanyangyuan N. 2019. Does the large amount of information in corporate disclosures hinder or enhance price discovery in the capital market? Journal of Contemporary Accounting & Economics 15: 36-52.
Farooque O. 2016. Sustainable financial reporting practice in Australian companies—Does quality matter? Journal of Developing Areas 50 (6): 175–189.
Francis J., Schipper K., Vincent L. 2002. Expanded disclosures and the increased usefulness of earnings announcements. The Accounting Review 77: 515-546.
Gelb D., Zarowin P. 2002. Corporate disclosure policy and the informativeness of stock prices. Review of Accounting Studies 7: 33-52.
Graham J., Harvey C., Rajgopal S. 2005. The economic implications of corporate financial reporting. Journal of Accounting and Economics 40: 3-73.
Healy P., Palepu K. 2001. Information asymmetry, corporate disclosure, and the capital markets: A review of the empirical disclosure literature. Journal of Accounting and Economics 31: 405-440.
Jovanovic B. 1982. Truthful disclosure of information. The Bell Journal of Economics 13: 36-44.
Jung W., Kwon Y. 1988. Disclosure when market is unsure of information endowment of managers. Journal of Accounting Research 26: 143-153.
Lee, M. 2019. Introduction: Bubbles and Machines. In Bubbles and Machines: Gender, Information and Financial Crises. London: University of Westminster Press; 1–28.
Lev B. 2018. The deteriorating usefulness of financial report information and how to reverse it. Accounting and Business Research 48 (5): 465–493.
Lehavy R., Li F., Merkley K. 2011. The effect of annual report readability on analyst following and the properties of their earnings forecasts. The Accounting Review 86: 1087¬–1115.
Li F. 2008. Annual report readability, current earnings, and earnings persistence. Journal of Accounting and Economics 45: 221-247.
Lo K., Ramos F., Rogo R. 2017. Earnings management and annual report readability. Journal of Accounting and Economics 63 (1): 1–25.
Loughran T., McDonald B. 2014. Measuring readability in financial disclosures. The Journal of Finance 69 (4): 1643–1671.
Lundholm R., Rogo R., Zhang J. 2014. Restoring the tower of Babel: How foreign firms communicate with U.S. investors. The Accounting Review 89: 1453-1485.
Stocken P., Verrecchia R. 2004. Financial Reporting System Choice and Disclosure Management. The Accounting Review 79 (4): 1181-1203.
You H., Zhang X. 2009. Financial reporting complexity and investor underreaction to 10-K information. Review of Accounting Studies 14: 559–586.
Downloads
Published
How to Cite
Issue
Section
License
Articles of the Russian Management Journal are open access distributed under the terms of the License Agreement with Saint Petersburg State University, which permits to the authors unrestricted distribution and self-archiving free of charge.
