Corporate Financial Disclosure in an Emerging Capital Market
: Evidence from Kuwait

  • Issa Dawd

    Student thesis: Doctoral ThesisDoctor of Philosophy


    The importance of disclosure in corporate annual reports has increased over the past couple of decades (Beattie and Pratt, 2002). This increase has been attributed in part to growth in the knowledge economy (Beattie and Pratt, 2002; Beattie, 2012). Disclosure is now accepted as an essential component of financial statements and its place is cemented by recent changes in the regulatory framework which place disclosure matters at the heart of some key accounting standards. In addition the recent financial crisis has further fuelled debate on the need for relevant disclosures but concern is growing about information overload and avoiding ‘clutter’ (Beattie and Pratt, 2002; Beattie, 2012). Disclosure has long been considered essential to economic development and growth particularly in an emerging economy context (Gill and Tropper, 1988).

    Notwithstanding the importance of corporate financial disclosure and a few notable exceptions, very little is documented in the extant literature about financial disclosure practices in developing countries. Therefore, the aim of this thesis is to extend empirical knowledge and contribute to the corporate disclosure literature by providing empirical evidence on corporate financial disclosure in the emerging capital market of Kuwait. Kuwait is of interest because of the remarkable growth in stock exchange activity and the unique business environment faced there. In addition, as Kuwait first adopted IAS/IFRS in 1991 users and preparers should be well-versed in it and the country therefore represents an ideal and fruitful site for analysis. The results of the study are likely to have implications for decision makers, the academic community and accounting standard setters.

    This thesis has five principal aims: (i) to explore the extent of compliance with IFRS disclosure requirements by Kuwaiti non-financial listed companies; (ii) to investigate the extent of aggregate (mandatory and voluntary) financial disclosure provide by Kuwaiti non-financial listed companies; (iii) to ascertain the relationships between selected corporate characteristics such as company size, leverage, profitability, liquidity, listing age, type of auditor, and type of industry and aggregate, mandatory, and voluntary financial disclosure; (iv) to document the annual report preparers’ perceptions of financial disclosure practices in Kuwaiti non-financial listed firms; and (v) to analyse whether/how annual reports of Kuwaiti non-financial listed companies satisfy users’ needs. The study is grounded in the decision usefulness literature and makes use of two primary research methods, namely: (i) three unweighted disclosure indices aimed at measuring the extent of aggregate, mandatory and voluntary disclosure published in annual reports issued by 51 non-financial Kuwaiti companies; and (ii) a questionnaire survey which explored the perceptions of preparers and users of corporate annual reports.
    Overall, the results provided a detailed picture of reporting practices in Kuwait with large companies disclosing more information than small companies, but only in terms of voluntary disclosure. More profitable companies tended to disclose less mandatory information than companies with lower income levels, while leverage, liquidity, listing age and audit type were found to have no significant association with disclosure.

    The questionnaire evidence revealed that accounting practices in Kuwait non-financial firms are firmly rooted in a decision-usefulness tradition with management and the board of directors viewed as the key audience for reporting information. Indeed, the annual reports of Kuwaiti non-financial listed companies are perceived as the most important sources of information. On the whole both preparers and users shared similar concerns regarding the volume of information contained within annual reports, however, their views differed in terms of identifying potential solutions.
    Date of Award2014
    Original languageEnglish
    SupervisorTheresa Dunne (Supervisor)

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