Country-specific differences in disclosure compliance –A quantitative study comparing the compliance degree of paragraph 134 in IAS 36 Impairment of Assets in Sweden and the United Kingdom
Background and problem discussion: Since 2005 all listed companies in the European Union have been obligated to apply the IFRS regulations. The purpose of the implementation is to increase the transparency and comparability, which in the long run aims to harmonise the accounting behaviour. One area discussed frequently is disclosures, since they can involve a lot of subjective judgments and lack of direct guidance. Studies show that there are severe implementation variations due to different country-‐ and firm-‐specific factors. ESMA published a report in 2013 that identifies a handful of problem areas tied to disclosure compliance in IAS 36 Impairment of Assets. Purpose: The purpose of this thesis is to investigate whether the degree of compliance of the disclosure requirements in paragraph 134 of IAS 36 is varying when comparing Swedish listed companies with British listed companies from the Industry sector. Further, we aim to investigate whether the result of the compliance degree can be explained by country-‐specific factors. Methodology: A quantitative method has been used, where a multiple regression were performed. Our dependent variable is the compliance level of the Industry companies listed on both London Stock Exchange and OMX Stockholm. This information was gathered from the note section in the annual reports from 2012. The independent variables are both firm-‐specific and country-‐specific in order to identify any discrepancies. Analysis/Conclusion: This study finds that there is a significant discrepancy in compliance level between the observed companies in Sweden and the United Kingdom. This discrepancy could be explained by various country-‐specific factors, such as enforcement differences and variations in the national culture. Further, the findings indicate that there is a variation in the ownership dispersion, which is a significant factor that influences the compliance degree. The multiple regression model of this thesis shows that 19% of the compliance level is explained by the independent variables.
Compliance, Disclosure, Goodwill, IAS 36, IFRS, Impairment, Multible Regression, Sweden, the United Kingdom