Accounting disclosure for the stock market in Egypt: an international perspective

Citation

(2009), "Accounting disclosure for the stock market in Egypt: an international perspective", Journal of Accounting & Organizational Change, Vol. 5 No. 4. https://doi.org/10.1108/jaoc.2009.31505dad.001

Accounting disclosure for the stock market in Egypt: an international perspective

Article Type: Doctoral research abstracts From: Journal of Accounting & Organizational Change, Volume 5, Issue 4

Purpose – The purpose of this thesis is to examine the effect of international environmental factors, namely global competition; international socio-political institutions; international stock market; international accounting standards; information technology and communication; and international financial institutions, on the accounting disclosure practices of non-financial companies listed on the Egyptian Stock Exchange (ESE). The literature review of this study confirms that although there is a growing body of literature concentrating on accounting in Egypt, most previous studies in this country investigate the relationship between accounting disclosure practice and its internal or local environment, stock market performance, accounting information systems, and application of the International Accounting Standards that are changed later to the International Financial Reporting Standards. Consequently, there is a lack of systematic empirical research examining the association between accounting disclosure practice of listed companies on the ESE and international environmental factors. The study is primarily motivated by such an apparent gap in prior research.

Design/methodology/approach – This study has formulated hypotheses regarding the relationship between international environmental factors and accounting disclosure practices, so it uses a quantitative research method. This includes archival sources such as annual reports and a questionnaire survey. Based on contingency theory, following previous disclosure studies and controlling for five variables, namely firm size; industry type; legal ownership/form; stock exchange cross listing; and foreign investors, the study's model is developed to examine the effect of international environmental factors on the level of accounting disclosure practices for the stock exchange in Egypt.

Findings – Based on data collected from a sample of 100 non-financial Egyptian listed companies, multiple regression analyses indicate that the level of a company's voluntary disclosure is positively and significantly associated with international socio-political institutions (such as United Nations, European Union, Association of South East Asian Nations, World Trade Organizations, and Organization for Economic Cooperation and Development); international accounting standards; and international financial institutions (such as World Bank and International Monetary Fund). Contrary to the researcher's expectations, the study's findings reveal no significant association between voluntary disclosure level and global competition. The findings reported in this thesis have two important practical implications. First, international investors interested in emerging markets may find the results of this study beneficial, as it provides analysis of the relationship between the levels of accounting disclosure practices on the ESE and the international environment within a developing country context. Second, the subject organizations (non-financial listed companies on the ESE) may use the findings of the study as a guide when implementing their accounting disclosures. Moreover, the Capital Market Authority in Egypt can also use the findings to develop the voluntary disclosure regulations in Egypt.

Originality/value – The study makes a significant contribution to the accounting disclosure field by providing evidence from Egypt that international environmental factors may influence the type and level of accounting disclosure in organizations. Therefore, the findings of this study will further understanding of accounting practices in a developing country context. The study provides a theoretical framework upon which such further work could be based and, based upon it, some firm suggestions for future directions in such research, in the hope that a small advance in theoretical development may lead to advances in the empirical arena. Therefore, this study provides in combination a richer and more complete theoretical basis for examination of the environmental factors influencing the development of accounting and disclosure practices.

Keywords: Disclosure, Accounting, Stock markets, Egypt

Research type – Quantitative study

Award institute – La Trobe University, Melbourne, Australia

Supervisors – Professor Zahirul Hoque and Professor Kamran Ahmed

Contact e-mail – m.elsayed@cqu.edu.au

DOI: 10.1108/18325910910994711

Mohamed A. Omran ElsayedSchool of Commerce and Marketing, Central Queensland University, Rockhampton, Australia