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The Determinants of forward-looking disclosures in interim reports for non-financial firms: evidence from a developing country

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dc.creatorMathuva, David
dc.dateFri, 15 Mar 2013 12:10:23
dc.dateMonth: 10 Day: 13 Year: 2012
dc.dateFri, 15 Mar 2013 12:10:23
dc.date.accessioned2015-03-18T11:28:50Z
dc.date.available2015-03-18T11:28:50Z
dc.descriptionInternational Journal of Accounting and Financial Reporting
dc.descriptionThis paper examines the determinants of the forward-looking disclosures (FLD) in the interim financial reports (IFRs) of non-financial firms listed on the Nairobi Securities Exchange (NSE). Data were collected from a total of 91 firm-year observations for the mid interim periods between 2009 and 2011. A FLD score was developed for each firm in the sample based on the firm‟s disclosure of forward-looking statements in its IFR. The results indicate that firms with higher debt, better performance, higher capital investment and with more concentration of foreign investment tend to have more FLDs in their IFRs. Conversely, cross listed firms are associated with lower FLDs, implying that cross listed firms provide lower forward-looking information compared to non-cross listed firms. Results show a high degree of FLD for better performing firms and firms with higher financial risk. This study contributes to literature by providing evidence to which financial reporting incentives contribute to FLDs in a developing country where enforcement is weak. As a conclusion, the paper recommends firms to provide comprehensive FLDs in future to effectively mitigate informational asymmetries between the management and owners of the firms, especially firms with more concentrated foreign ownership.
dc.description.abstractThis paper examines the determinants of the forward-looking disclosures (FLD) in the interim financial reports (IFRs) of non-financial firms listed on the Nairobi Securities Exchange (NSE). Data were collected from a total of 91 firm-year observations for the mid interim periods between 2009 and 2011. A FLD score was developed for each firm in the sample based on the firm‟s disclosure of forward-looking statements in its IFR. The results indicate that firms with higher debt, better performance, higher capital investment and with more concentration of foreign investment tend to have more FLDs in their IFRs. Conversely, cross listed firms are associated with lower FLDs, implying that cross listed firms provide lower forward-looking information compared to non-cross listed firms. Results show a high degree of FLD for better performing firms and firms with higher financial risk. This study contributes to literature by providing evidence to which financial reporting incentives contribute to FLDs in a developing country where enforcement is weak. As a conclusion, the paper recommends firms to provide comprehensive FLDs in future to effectively mitigate informational asymmetries between the management and owners of the firms, especially firms with more concentrated foreign ownership.
dc.formatVolumes:Vol. 2, No. 2
dc.identifier2162-3082
dc.identifier
dc.identifier.urihttp://hdl.handle.net/11071/3455
dc.languageeng
dc.publisherMacrothink Institute
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dc.subjectInterim financial report
dc.subjectforward-looking disclosure
dc.subjectfinancial risk
dc.subjectinformational asymmetry.
dc.titleThe Determinants of forward-looking disclosures in interim reports for non-financial firms: evidence from a developing country
dc.typeArticle
dspace.entity.typePublication
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