IDEAS home Printed from https://ideas.repec.org/a/ami/journl/v23y2024i2p317-338.html
   My bibliography  Save this article

Firm Characteristics and Compliance with IFRS 15 Mandatory Disclosures: Evidence from French Firms

Author

Listed:
  • Sameh Kobbi-Fakhfakh
  • Nesrine Belguith

    (High Business School of Sfax (ESCS), University of Sfax, Tunisia)

Abstract

Research Question- Do firm characteristics affect compliance with IFRS 15 mandatory disclosures? Motivation- IFRS 15 became mandatory for annual periods beginning on or after January 1, 2018. It introduces new revenue recognition rules compared to the legacy standards and sets extensive disclosure requirements. Focusing on compliance with IFRS 15 mandatory disclosures allows us to measure and understand firm’s disclosures on a specific topic such as revenue which represents a key performance indicator for a given firm. Idea- This study examines the association between firm characteristics and compliance with IFRS 15 disclosures. Data- We selected non-financial firms listed on the French stock market index CAC all tradable. 431 firm-year observations operating in different sectors were identified and cover the 2018- 2021 period. Based on a list comprising the disclosures required under IFRS 15, we performed a content analysis of the annual reports to measure compliance level with IFRS 15 mandatory disclosures. An unweighted disclosure index was then computed. We collected data on firm characteristics from DATASTREAM database. Tools- We developed a multiple regression model with panel data including industry and year fixed effects. We used STATA software to estimate the model. Findings- Results show that the degree of compliance with IFRS 15 mandatory disclosures varies from one industry to another as well as within the same industry and firms do not fully comply with IFRS15 disclosure requirements. In addition, firm characteristics such as firm size, leverage, profitability, audit firm size, and ownership concentration seem to be key determinants of compliance with IFRS15 mandatory disclosure requirements. Contribution- Research on how firms comply with IFRS 15 mandatory disclosures is scarce. To the best of our knowledge, apart from Napier and Stadler (2020), Boujelben and Kobbi-Fakhfakh (2020), Karim and Riya (2022) and Krupova and Partac (2022), no study has investigated this research question. While these studies have provided information on the items complied with, they have advanced descriptive analyses. To the best of our knowledge, this is the pioneer study that measures compliance with IFRS 15 mandatory disclosure requirements and provides empirical evidence on firm-level determinants of compliance levels.

Suggested Citation

  • Sameh Kobbi-Fakhfakh & Nesrine Belguith, 2024. "Firm Characteristics and Compliance with IFRS 15 Mandatory Disclosures: Evidence from French Firms," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 23(2), pages 317-338, June.
    • Handle: RePEc:ami:journl:v:23:y:2024:i:2:p:317-338
    as

    Download full text from publisher

    File URL: http://online-cig.ase.ro/RePEc/ami/articles/23_2_2.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Owusu-Ansah, Stephen, 1998. "The impact of corporate attribites on the extent of mandatory disclosure and reporting by listed companies in Zimbabwe," The International Journal of Accounting, Elsevier, vol. 33(5), pages 605-631.
    2. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-795, December.
    3. Hodgdon, Christopher & Tondkar, Rasoul H. & Harless, David W. & Adhikari, Ajay, 2008. "Compliance with IFRS disclosure requirements and individual analysts’ forecast errors," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 17(1), pages 1-13.
    4. Martin Glaum & Peter Schmidt & Donna L. Street & Silvia Vogel, 2013. "Compliance with IFRS 3- and IAS 36-required disclosures across 17 European countries: company- and country-level determinants," Accounting and Business Research, Taylor & Francis Journals, vol. 43(3), pages 163-204, June.
    5. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-329, May.
    6. Saoussen Boujelben & Sameh Kobbi-Fakhfakh, 2020. "Compliance with IFRS 15 mandatory disclosures: an exploratory study in telecom and construction sectors," Journal of Financial Reporting and Accounting, Emerald Group Publishing Limited, vol. 18(4), pages 707-728, July.
    7. Stephen A. Ross, 1977. "The Determination of Financial Structure: The Incentive-Signalling Approach," Bell Journal of Economics, The RAND Corporation, vol. 8(1), pages 23-40, Spring.
    8. Begoña Giner Inchausti, 1997. "The influence of company characteristics and accounting regulation on information disclosed by Spanish firms," European Accounting Review, Taylor & Francis Journals, vol. 6(1), pages 45-68, May.
    9. Sameh Kobbi-Fakhfakh & Ridha Mohamed Shabou & Benoit Pigé, 2018. "Determinants of segment reporting quality: evidence from EU," Post-Print hal-01876377, HAL.
    10. Fama, Eugene F, 1980. "Agency Problems and the Theory of the Firm," Journal of Political Economy, University of Chicago Press, vol. 88(2), pages 288-307, April.
    11. Wallace, R. S. Olusegun & Naser, Kamal, 1995. "Firm-specific determinants of the comprehensiveness of mandatory disclosure in the corporate annual reports of firms listed on the stock exchange of Hong Kong," Journal of Accounting and Public Policy, Elsevier, vol. 14(4), pages 311-368.
    12. Volkan Demir & Oguzhan Bahadir, 2014. "An Investigation of Compliance with International Financial Reporting Standards by Listed Companies in Turkey," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 13(1), pages 4-34, March.
    13. Sameh Kobbi-Fakhfakh, 2017. "Geographical disclosure quality under IFRS 8: a European Union analysis," International Journal of Banking, Accounting and Finance, Inderscience Enterprises Ltd, vol. 8(2), pages 217-242.
    14. Green, Donald W, 1978. "Capital Formation in the USSR, 1959-74: An Econometric Investigation of Bureaucratic Intervention in the Process of Capital Construction," The Review of Economics and Statistics, MIT Press, vol. 60(1), pages 39-46, February.
    15. Cascino, Stefano & Gassen, Joachim, 2015. "What drives the comparability effect of mandatory IFRS adoption?," LSE Research Online Documents on Economics 57682, London School of Economics and Political Science, LSE Library.
    16. Ann Tarca, 2020. "The IASB and Comparability of International Financial Reporting: Research Evidence and Implications," Australian Accounting Review, CPA Australia, vol. 30(4), pages 231-242, December.
    17. Gareth Adams, 1994. "What Is Compliance?," Journal of Financial Regulation and Compliance, Emerald Group Publishing Limited, vol. 2(4), pages 278-285, April.
    18. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    19. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    20. Laurent Lazar & Patrick Velte, 2018. "Determinants of mandatory goodwill disclosure: the case of impairment testing in Germany," International Journal of Managerial and Financial Accounting, Inderscience Enterprises Ltd, vol. 10(4), pages 301-330.
    21. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 87(3), pages 355-374.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Holmstrom, Bengt R. & Tirole, Jean, 1989. "The theory of the firm," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 2, pages 61-133, Elsevier.
    2. Devalle, Alain & Rizzato, Fabio & Busso, Donatella, 2016. "Disclosure indexes and compliance with mandatory disclosure—The case of intangible assets in the Italian market," Advances in accounting, Elsevier, vol. 35(C), pages 8-25.
    3. Corinne Bessieux-Ollier & Élisabeth Walliser, 2012. "Why firms listed on an unregulated financial market comply voluntarily with IFRS: An empirical analysis with French data," Post-Print hal-00690935, HAL.
    4. Riaz, Zahid & Ray, Pradeep & Ray, Sangeeta, 2022. "The impact of digitalisation on corporate governance in Australia," Journal of Business Research, Elsevier, vol. 152(C), pages 410-424.
    5. Matthias Kiefer & Edward Jones & Andrew Adams, 2016. "Principals, Agents and Incomplete Contracts: Are Surrender of Control and Renegotiation the Solution?," CFI Discussion Papers 1603, Centre for Finance and Investment, Heriot Watt University.
    6. Luminita Enache & Khaled Hussainey, 2020. "The substitutive relation between voluntary disclosure and corporate governance in their effects on firm performance," Review of Quantitative Finance and Accounting, Springer, vol. 54(2), pages 413-445, February.
    7. repec:eee:labchp:v:2:y:1986:i:c:p:789-848 is not listed on IDEAS
    8. Tsalavoutas, Ioannis & Tsoligkas, Fanis & Evans, Lisa, 2020. "Compliance with IFRS mandatory disclosure requirements: A structured literature review," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 40(C).
    9. Shoaib Khan & Yasushi Suzuki, 2016. "Ownership and Capital Structure of Pakistani Non Financial Firms," Financial Internet Quarterly (formerly e-Finanse), Sciendo, vol. 12(1), pages 57-67.
    10. Faisal S. Alanezi & Mishari M. Alfraih & Saad S. Alshammari, 2016. "Operating Segments (IFRS 8)-Required Disclosure and the Specific-Characteristics of Kuwaiti Listed Companies," International Business Research, Canadian Center of Science and Education, vol. 9(1), pages 136-153, January.
    11. Céline CARRERE & Marco FUGAZZA & Marcelo OLARREAGA & Frédéric ROBERT-NICOUD, 2016. "On the heterogeneous effect of trade on unemployment," Working Papers P180, FERDI.
    12. Elshandidy, Tamer & Fraser, Ian & Hussainey, Khaled, 2013. "Aggregated, voluntary, and mandatory risk disclosure incentives: Evidence from UK FTSE all-share companies," International Review of Financial Analysis, Elsevier, vol. 30(C), pages 320-333.
    13. Reddy, Kotapati Srinivasa, 2016. "Institutional Voids and Tax litigation in Emerging Economies: The verdict of Vodafone cross-border acquisition of Hutchison," MPRA Paper 74264, University Library of Munich, Germany, revised 2016.
    14. Alejandro Vargas Sanchez, 2014. "Estructura de capital Óptima en presencia de costos de dificultades financieras," Investigación & Desarrollo, Universidad Privada Boliviana, vol. 1(1), pages 44-66.
    15. Edward M. Iacobucci & Ralph A. Winter, 2005. "Asset Securitization and Asymmetric Information," The Journal of Legal Studies, University of Chicago Press, vol. 34(1), pages 161-206, January.
    16. Timothy Fogarty & Michel Magnan & Garen Markarian & Serge Bohdjalian, 2009. "Inside Agency: The Rise and Fall of Nortel," Journal of Business Ethics, Springer, vol. 84(2), pages 165-187, January.
    17. Gerry Gallery & Emerson Cooper & John Sweeting, 2008. "Corporate Disclosure Quality: Lessons from Australian Companies on the Impact of Adopting International Financial Reporting Standards," Australian Accounting Review, CPA Australia, vol. 18(3), pages 257-273, September.
    18. Keith D. Harvey & Ronald E. Shrieves, 2001. "Executive Compensation Structure And Corporate Governance Choices," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 24(4), pages 495-512, December.
    19. Kim, Sang-Joon & Bae, John & Oh, Hannah, 2019. "Financing strategically: The moderation effect of marketing activities on the bifurcated relationship between debt level and firm valuation of small and medium enterprises," The North American Journal of Economics and Finance, Elsevier, vol. 48(C), pages 663-681.
    20. Andres, Christian & Cumming, Douglas & Karabiber, Timur & Schweizer, Denis, 2014. "Do markets anticipate capital structure decisions? — Feedback effects in equity liquidity," Journal of Corporate Finance, Elsevier, vol. 27(C), pages 133-156.
    21. Mustaruddin Mustaruddin & Aristya Dinata & Wendy Wendy & Anwar Azazi, 2017. "Asymmetric Information and Capital Structure: Empirical Evidence from Indonesia Stock Exchange," International Journal of Economics and Financial Issues, Econjournals, vol. 7(6), pages 8-15.

    More about this item

    Keywords

    IFRS 15; compliance; mandatory; disclosure index; firm characteristics; determinants; France;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ami:journl:v:23:y:2024:i:2:p:317-338. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Cristina Tartavulea (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.