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

See all articles by Amitav Saha

Amitav Saha

School of Business, The University of Notre Dame Australia

Richard Donald Morris

UNSW Australia Business School, School of Accounting

Helen Kang

UNSW Australia Business School, School of Accounting

Multiple version iconThere are 2 versions of this paper

Date Written: March 21, 2019

Abstract

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

Saha, Amitav and Morris, Richard Donald and Kang, Helen Hyon Ju, Disclosure Overload? An Empirical Analysis of International Financial Reporting Standards Disclosure Requirements (March 21, 2019). 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, Available at SSRN: https://ssrn.com/abstract=3813580 or http://dx.doi.org/10.2139/ssrn.3813580

Amitav Saha (Contact Author)

School of Business, The University of Notre Dame Australia ( email )

Sydney
Sydney, NSW 2000
Australia

Richard Donald Morris

UNSW Australia Business School, School of Accounting ( email )

Sydney, NSW 2052
Australia

Helen Hyon Ju Kang

UNSW Australia Business School, School of Accounting ( email )

Sydney, NSW 2052
Australia
+61 2 9385 5824 (Phone)
+61 2 9385 5925 (Fax)

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