An assessment of the quality of South African and Indian listed companies’ financial reporting
Date
2019
Authors
Haarburger, Carla Peta
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Abstract
Orientation: The accounting profession has been put in the spotlight as a result of the high amount of public failures and corporate collapses. The importance of high-quality financial reporting has been demonstrated not only by the past corporate failures, but also due to the scarce level of capital that is available to be allocated within capital markets.
Research aim: The primary objective of this study was to investigate the quality of financial reporting in South Africa and India.
Motivation for the study: This study contributed to the existing body of literature on financial statements. The focus of this study was on two of the emerging markets of the BRICS nations, South Africa and India. The members of the BRICS are suspected to be some of the strongest economies of the future; therefore, it is imperative that research is conducted in the context of these developing markets. This research analysed financial statement quality, which extends beyond the pure financial aspect of financial reporting since there is a demand for research that is focused on the qualitative aspects of financial reporting as opposed to solely quantitated financial figures.
Research approach and method: This research followed a quantitative approach. The approach employed a 21-index scorecard to score the application of the qualitative characteristics in the financial statements of 50 entities from the JSE and BSE. The entities were selected based on the highest market capitalisation entities for the 2017-year end. The data was analysed using descriptive statistics.
Main findings: The main finding of this study was that the application of the qualitative characteristics in South African companies was high. The application of the qualitative characteristics in India is not as high when compared with South Africa in most aspects; however, timeliness was a characteristic where India outperformed South Africa.
Applications: This research contributes to the existing body of knowledge on financial statements. This research was also a contribution and an investment into the developing markets, as both South Africa and India are emerging markets. This study also unlocked opportunities for further research that can be conducted in relation to this topic such as the motives behind Indian listed entities not preparing integrated reports as well as a study which analyses the link between financial statement quality and audit quality.
Contributions: This study contributes to the academic literature on financial statements. It also contributes towards the research into developing economies and it unlocks opportunities for future research.
Description
research report submitted to the School of Accountancy, Faculty of Commerce, Law and Management at the University of the Witwatersrand, Johannesburg, in fulfilment of the requirement for the degree of Masters of Commerce in Accounting, February 2019
Keywords
UCTD, Decision usefulness, Financial reporting quality, India, South Africa
Citation
Haarburger, Carla Peta. (2019). An assessment of the quality of South African and Indian listed companies' financial reporting. University of the Witwatersrand, https://hdl.handle.net/10539/29653