Narrative disclosure guidelines for CARs: an operational-based tool
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Narrative disclosure guidelines for CARs: an operational-based tool Alexandros Garefalakis1 · Nikolaos Sariannidis2 · Christos Lemonakis3 © Springer Science+Business Media, LLC, part of Springer Nature 2018
Abstract Management Commentary Index (Ma.Co.I) is a composite measuring index developed for the detailed evaluation of narrative disclosure quality, as this has been delineated by the Financial Accounting Standards Board—FASB and the International Accounting Standards Board—IASB in 2010 in the “An Improved Conceptual Framework for Financial Reporting” publication. The Ma.Co.I comprises of 70 Key performance Indicators (KPIs) and these KPIs are classified in five categories. A total of 129 Corporate Annual reports (CARs) of major, stock market listed companies in Canada, the US and Europe (including Switzerland, France, Germany, Belgium, Netherlands, Norway, Denmark, Sweden and the UK) were classified as either pre-IFRS (P-IFRS) for the period spanning from 2000 to 2004 or after-IFRS (AIFRS) for the period from 2005 to 2007. The primordial aim of this study is the exploration of whether the mandatory narrative guidelines set in Canada and the USA yield increased the disclosure quality of narrative section in CARs, in contrast to Europe firms that comply with non-mandatory guidelines. The secondary aim of this study is to examine a pioneering, new qualitative measurement tool used in testing for CARs quality, what we referred to as G&T -AIQAD. The present study’s conclusions indicate that this new measurement tool is an efficient and reliable method for exploring CARs quality. Keywords Narrative information · CARs · Ma.Co.I · Disclosure quality · G&T-AIQAD · KPIs
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Nikolaos Sariannidis [email protected] Alexandros Garefalakis [email protected] Christos Lemonakis [email protected]
1
Department of Finance and Accounting, Technological Educational Institute of Crete, Heraklion, Greece
2
Department of Finance and Accounting, Technological Educational Institute of Western Macedonia, Kozani, Greece
3
Department of Business Management, Technological Educational Institute of Crete, Ag. Nikolaos Branch, Agios Nikolaos, Greece
123
Annals of Operations Research
1 Introduction How narrative information is becoming central in how corporations tend to assess their creation procedures and that more often than not, narrative information is often excluded from appearing in Corporate Annual reports (CARs). Consequently, it is argued that if we are to increase narrative information in annual reports—information that is innovative and non-financial (Ware 2000; FASB 2001), then an improvement of corporate reporting quality is to be expected. Moreover, additional business aspects lend themselves to exploration and delineation when narrative reporting is available. The narrative section of CARs seems to have been drawing regulatory consideration on itself, which culminated in 2005 when the IASB issued its own views on it. The European Community regulation No. 1606/2002 clearly states that all EU-listed c
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