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Drivers of IAS 36 Disclosure Quality – Evidence from European Listed Firms

Coda, Stefano, Hossfeld, Christopher, Schmidt, Martin·2023
DOI 10.2139/ssrn.4673390
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Abstract

This paper reports on an analysis of IAS 36 disclosure quality using a large sample of data from listed firms in France, Germany, Italy and the UK. We find that geographical diversification is positively associated with disclosure quality. Firms choose higher levels of disclosure quality when IAS 36 disclosures are more important, for example when the firm recognized an impairment loss on goodwill, PPE or intangible assets and when goodwill is greater. Disclosure quality is also positively associated with institutional ownership, board size, and the country’s regulatory quality. Surprisingly, leverage, appointing a Big4 audit firm or firm size is not associated with disclosure quality. Disclosure quality varies cross-sectionally by industry and country/stock market index. Disclosure quality is lower in France compared to the other three countries, and surprisingly, this effect appears to be driven by firms in the French blue-chip stock-market indices (CAC 40, CAC Next 20), where disclosure quality is lower. Overall, however, the disclosure quality shows considerable room for improvement. As such, our findings have implications for securities regulators and audit firms. Our findings are also important for academics, as our large cross-country sample and our measure of disclosure quality provides evidence of the drivers of disclosure quality.

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Metadata

Authors
Coda, S., Hossfeld, C., & Schmidt, M.
Publisher
Elsevier BV
Published
2023
DOI
10.2139/ssrn.4673390
Cited by
1
Type
Preprint

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Coda, S., Hossfeld, C., & Schmidt, M. (2023). Drivers of IAS 36 Disclosure Quality – Evidence from European Listed Firms. https://doi.org/10.2139/ssrn.4673390

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