The main determinants of differences in compliance levels of disclosure items for IAS 16 in BIST

Sabri Erdem, Esra Aslanertik and Bengü Yardimci

Journal of Financial Reporting and Accounting, 2017, vol. 15, issue 3, 317-332

Abstract: Purpose - This paper aims to empirically examine the main determinants of the compliance level of disclosure requirements for IAS 16, as well as factors that may explain the differences in the levels of compliance within companies. Design/methodology/approach - The association between the level of compliance and various corporate characteristics was examined using Chi-square Automatic Interaction Detector (CHAID) analysis in financial disclosures for IAS 16. CHAID analysis was applied to the manufacturing companies listed in Borsa Istanbul for the years 2012 and 2013. Findings - It was found that the most significant factor is the auditor reputation within different nodes such as size or free float rate. In most of the studies, correlation is used to determine the association between different factors, but this study is the first one that uses the CHAID analysis which offers an adjusted significance testing, and at the same time classification of the interaction between variables. Research limitations/implications - This paper provides insights into the primary factors of disclosure compliance that help to improve the structure of disclosures and the level of compliance in preparing future financial reports. The proposed improvements will also support further developments in financial reporting regulations regarding disclosures. The key limitation in this paper is that it concentrates on a specific standard and only covers two years. However, it provides suggestions for one of the most important standards that includes various disclosures. Originality/value - In addition, this paper fills a gap in the literature about the compliance level of specific standards such as IAS 16 and the usage of CHAID analysis in such studies. The results were consistent with some previous studies regarding the relationship between compliance level, auditor reputation and size and it also highlight the effect of different disclosure items on compliance level.

Keywords: Auditor reputation; CHAID analysis; Compliance level; Disclosure analysis (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jfrapp:jfra-10-2016-0076

DOI: 10.1108/JFRA-10-2016-0076

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