Determinants of the reporting frequency and the amended form of the condensed reports
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School of Business |
Master's thesis
Ask about the availability of the thesis by sending email to the Aalto University Learning Centre oppimiskeskus@aalto.fi
Authors
Date
2018
Department
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Mcode
Degree programme
Accounting
Language
en
Pages
73
Series
Abstract
The objective of this thesis is to examine the quarterly reporting policies of the firms after the amendment of the quarterly reporting regulation in November 2015 as well as determinants affecting the reporting frequency in Finland. In addition, as a consequence of the amendment firms may disclose quarterly information but it does not need to be prepared in accordance with IAS 34. Thus, objective of thesis is also to examine the form of the condensed reports after the amendment to find out what information firms voluntarily disclose and what they have left out. Study of the determinants of the quarterly reporting is conducted by using binary and multinomial logistic regression models. Thesis includes two models with partly different variables to get a broader picture of the determinants affecting the managerial disclosure policy decision. First model is composed based on the Rahman et al. (2007) multivariate model and the second model is composed based on the Nallareddy et al. (2017) multinomial logistic regression model. Data about the reporting frequency of the firms for years 2016 and 2017 is hand collected from firms’ websites and the financial information is procured from the Thomson Reuters Eikon -database. This study provides important and up to date information about the quarterly reporting in Finland as well as new information about the effects of the recent amendment of the quarterly reporting regulation. After the amendment of the regulation, 11% of the Finnish stock listed firms had stopped disclosing quarterly reports and 16% of the firms disclosed condensed quarterly reports in 2017. Based on the results of the binary and multinomial logistic regressions smaller and unprofitable firms are more likely to stop disclosing quarterly reports. In addition, the firm value may affect the decision to stop disclosing quarterly reports. Smaller firms also more likely start disclosing condensed quarterly reports. In addition, firms with low growth opportunities and lower leverage may be more likely to condense quarterly. Overall findings of the thesis support the findings of previous empirical evidence from U.S., U.K. and Singapore (e.g. Butler et al. 2007; Rahman et al. 2007; Nallareddy et al. 2017). Information included in the condensed quarterly reports includes key figures especially the net sales figures, short narrative description about the development and earnings guidance for the rest of the financial year. Notable is that most firms do not disclose statement of financial position, statement of profit and loss, statement of cash flow, statement of changes in equity or selected notes in their condensed reports. However, firms that did disclosed more often the statement of financial instead of statement of profit and loss.Description
Thesis advisor
Niemi, LasseKeywords
quarterly reporting, reporting frequency, disclosure, determinants, condensed reports, quarterly reporting regulation