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Advances in Accounting, incorporating Advances in International Accounting j o u r n a l h o m e p a g e : w w w. e l s ev i e r. c o m / l o c a t e / a d i a c
Voluntary disclosure in the annual reports of an emerging country: The case of Qatar Mohammed Hossain ⁎, Helmi Hammami 1
Department of Accounting and Information Systems, College of Business and Economics, Qatar University, PO Box 2713, Qatar
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This study sets out to examine empirically the determinants of voluntary disclosure in the annual reports of 25 listed ﬁrms of Doha Securities Market (DSM) in Qatar forming approximately 86% of the total ﬁrms incorporated in DSM. It also reports the results of the association between company-speciﬁc characteristics and voluntary disclosure of the sample companies. A disclosure checklist consisting of 44 voluntary items of information is developed and statistical analysis is performed using multiple regression analysis. The ﬁndings indicate that age, size, complexity, and assets-in-place are signiﬁcant and other variable proﬁtability is insigniﬁcant in explaining the level of voluntary disclosure. However, this paper has contributed to the academic literature that ﬁrms in the Middle East provide voluntary corporate information which builds a conﬁdence to the investors in general and Qatar in particular. © 2009 Elsevier Ltd. All rights reserved.
1. Introduction This study explores the extent and levels of voluntary disclosures in the annual reports of the listed company in the Doha Securities Market (DSM) in Qatar, a growing emerging country. The disclosure of ﬁnancial information in annual reports is a key area of accounting research and, more speciﬁcally, voluntary disclosure has received a great attention to the academicians and several research is done both in developed (Firth, 1979; Spero, 1979; Bradbury, 1992; Raffournier, 1995; Hossain, Perera, & Rahman, 1995) and developing countries (Cooke, 1991, 1989b; Chow & Wong-Boren, 1987; Hossain, Tan, & Adams, 1994; Ferguson et al., 2002; Hossain & Reaz, 2007; Hossain, 2008), however, a very few attention is done in the Middle East (AlRazeen & Karbhari, 2004; Alsaeed, 2006; Naser et al., 2006; AlShammari, 2008; Aljifri, 2008) in general and Qatar in particular. The annual report is a signiﬁcant element in the overall disclosure process, because it is the most widely disseminated source of information on publicly held corporations (Arnold, Moizer & Noreen, 1984; Chang, Most, & Brain, 1983; Todd & Sherman, 1991) however, voluntary disclosure in the annual report means in nature the information beyond the required content in the ﬁnancial statements (Kumar, Wilder, & Stocks, 2008). In other words, voluntary disclosure is to disclose more information based on managerial incentives (Healy & Palepu, 2001).2 ⁎ Corresponding author. Tel.: +974 485 1845; fax: +974 485 2355. E-mail address: firstname.lastname@example.org (M. Hossain). Tel.: +974 485 1834; fax: +974 485 2355. Here mandatory disclosure and voluntary disclosure are both included in an information disclosure system (Lanen & Verrecchia, 1987). The ﬁnancial Accounting Standard Board (FASB, 2000) describes “voluntary disclosures” as “information primarily outside of the ﬁnancial statements that are not explicitly required by accounting rules or standards”. 2 1
The available literature has suggested many ways in which a ﬁrm or its management can beneﬁt from improve disclosure (Lang & Lundholm, 1993, 1996; Frankel, McNichols, & Wilson, 1995; Healy, Hutton, & Palepu, 1999). Moreover, while information disclosure is socially desirable (Frolov, 2004; Diamond, 1985), the interplay between its beneﬁts and costs (Meek et al., 1995) may lead to partial or no disclosure, and one thereupon should ask whether the disclosure should be voluntary or mandatory....