Disclosure Overload? An Empirical Analysis of International Financial Reporting Standards Disclosure Requirements
Saha, A., R.D. Morris and H. Kang (2019), ‘Disclosure Overload? An Empirical Analysis of International Financial Reporting Standards Disclosure Requirements’, ABACUS, Vol. 43, No. 1, pp. 205 – 236. http://dx.doi.org/10.1111/abac.12148
50 Pages Posted: 29 Apr 2021
Date Written: March 21, 2019
Despite the positive effects of the adoption of International Financial Reporting Standards (IFRS) noted in the literature, standard setters have issued reports suggesting that the required disclosures in IFRS have become too burdensome and should be reduced. We examine this disclosure overload problem by testing whether the disclosure reduction recommendations of the Excess Baggage Report issued by professional accounting bodies from Scotland and New Zealand in 2011 are associated with companies’ disclosure incentives and are value relevant for a sample of 196 Australian listed companies. The Excess Baggage Report classifies current IFRS disclosure requirement items into three categories: Retain; Delete; and Disclose if Material. We find that Retain items are disclosed the most, followed by those classified as Disclose if Material, and then by Delete items. Only Retain items are significantly associated with companies’ disclosure incentives. We also find that these disclosure categories are value relevant, especially for below-median profitability firms. Our findings may provide input to the IASB’s ongoing Disclosure Initiatives project.
Keywords: Disclosure Incentives; Disclosure Overload; IFRS Disclosure Requirements; Value Relevance
JEL Classification: M41
Suggested Citation: Suggested Citation