Summary of the main article’s introduction:

The value relevance of disclosure: evidence from the emerging

capital market of Egypt.
This article aims at examining the relationship between the mandatory and the voluntary
disclosure and the value of the firm

Summary of the introduction:

Prior studies have always focused on voluntary disclosure only and have been conducted in
developed countries. Moreover, previous studies have focused either on examining the link
between voluntary disclosure and stock liquidity or the cost of equity capital, as according to
the finance-theory predictions the more public information disclosed, the less the firm’s
cost of capital and, the more cash flows to shareholders. Therefore, this is the first paper to
examine the relationship between both voluntary and mandatory disclosure and the firm’s
value in a developing country (Egypt).

Limited literature can be found regarding the mandatory disclosure, as the effects of
mandatory disclosure are somehow complex since the companies can respond to the
imposed costs in numerous ways. The effect of the mandatory disclosure can be divided into
direct and indirect effects. The direct impact arises from the cost of compliance with
mandatory disclosures. The indirect effects arise from externalities whether they are
positive or negative.

It is argued that the effects of disclosure depend on three factors: uncertainty, multi person
settings with conflict of interest and information asymmetry.

Disclosing information might have a negative value in many cases as investors may perceive
themselves worse-off if they assume that the company is disclosing information that might
be later on used against them. Moreover, investors might suspect the intentions of a
company if it provided more information to the market without an obligation to do so.

This study aims at filling the gap identified in the current literature as it focuses on the
following points:
1. It examines the value relevance of disclosure in an emerging capital market of Egypt
as most previous studies focus on developed economies such as united states and
Europe.
2. This study examines statistically the link between the financial disclosure and the
firm value as most prior studies assume that increased disclosure will reduce the
cost of capital and consequently enhances the firm’s value.
3. This study focuses on both voluntary and mandatory disclosures unlike previous
study which only focuses on voluntary disclosure.

This paper is organized as follows section two provides an overview of EGX and financial
reporting regulations. Section three provides a discussion of the literature review and the
research hypothesis. Data collection and information sources are presented in section 4.
Section five provides a discussion for the results and finally, the research conclusions and
suggestions for future work are presented in section six.

The value relevance of intellectual capital disclosure: empirical

evidence from Kuwait.
Summary of the introduction:
Corporate financial reporting is the only way corporations communicate with their
stockholders. due to rapid changes in the business environment concerns have increased
regarding whether financial reporting achieves its objectives or not. The economy has
shifted from industrial economy dominated by tangible resources to a knowledge based
economy in which intellectual capital is a critical component for success. Intellectual capital
is defined as: knowledge, information, intellectual property and experience that can be used
to create wealth. Therefore, it is considered as “unaccounted capital in the traditional
accounting systems, thus, investors nowadays need information that goes beyond
traditional financial reporting to evaluate their investment decisions properly.

Intellectual capital disclosure consisting of nonfinancial measures and other information

drives the competitive advantage of the company. Upon a study conducted by Ernst and
young 80 % of the sample considered non-financial information to be important in decision-
making.

Value relevance research is based on the premise that if the accounting information is useful
investors will adjust their reaction and the market will respond quickly through a change in
the stock price. Researchers have concluded that the value relevance of the traditional
financial reporting have declined due to the changes in business environment.

Previous literature has proved the value relevance of non-financial information and consider
it as complementary to the traditional financial information.

Most of the prior studies of the value relevance of IC disclosure was conducted in developed
markets this study focuses on frontier market which is considered a sub-class of the
emerging markets of which Kuwait is a key element.

Drawing on market efficiency theory and studies of ICD this paper is aimed at testing
whether the IC disclosure is value relevant in equity valuation.

An index was developed in order to measure the extent of the IC disclosure, this index
consists of three major categories: internal capital, external capital and human capital. The
hypothesis is that the value relevance is expected to vary as a function of the ICD.

The findings of this study have important implications for which encourage companies to
include ICD in their annual reports. As it presents the following findings:
1. Intellectual capital disclosure plays an important role in equity valuation
 2. Importance of complementing traditional financial Information with non-financial
information
Those findings can help raise awareness of the positive effects the ICD can have on equity
valuation.

The remainder of the paper is organized as follows section two reviews the literature on ICD
and the value relevance of accounting information section 3 outlines the research method.
section 4 presents the analysis of the data and the results of the study. Finally, section 5
presents the summary and concluding comments.

Does financial disclosure influence the value relevance of

accounting information?
Most previous research examining the effect of the level and the time of financial disclosure
are conducted in developed countries. No research has examined this relation in developing
countries such as Jordan, despite its growing importance in the commerce sector.

This research is conducted by examining Jordanian industrial and service companies within
2004-2009. The value relevance of accounting information Is indicated through examining
the relationship between the accounting information and the share price while applying
company’s size and leverage as control variables.

Despite the fact that Jordan started applying IAS in 1990 and adopted IFRS, it has generally
looser forms of regulation. Financial statements are mainly issued to provide sufficient and
timely information for decision makers otherwise the financial statements will lose their
usefulness and they will be of no value.

The research question in this paper is “Do FD level and time influence the value relevance of
earnings, book value, and cash flows? “

Prior studies have focused either on examining the relationship between information
disclosure and share price or investigating the influence of financial disclosure level on the
firm’s value relevance, therefore this paper is the first to extend and combine these studies
by examining the influence both the FDI level and time on the value relevance of Jordanian
companies’ earnings, book value and cash flows. It is expected that the influence is positive.

Section 2 contains the literature review, section three has the hypothesis development.
Section four shows the sample and models whereas the findings are in section 5. Finally,
conclusions are presented in the last section of this paper.
Value relevance of IFRS mandatory disclosure requirements

Summary of the introduction:

There is a difference between voluntary and mandatory disclosure, the former is optional
where firms talk about their aspirations for future success, whereas the latter force
companies to disclose all its accounting figures including the good and the bad news which
means that more proprietary and nonproprietary information is provided.

This paper fills the literature gap by examining the value relevance of mandatory disclosure
as all the prior studies have only examined that of the voluntary disclosure.

The score of compliance with mandatory disclosure requirement was calculated for 150
Greek listed companies in 2005. Higher value relevance translates into higher accounting
quality.

Greece is considered an optimal setting for the study due to the following facts:
1. It is distinct from other developed markets as 50 % of the capitalization belongs to
foreign investors.
2. The accounting/audit profession is very young and the enforcement is weak.
3. The level of voluntary disclosure is low.
These characteristics resulted in a widely divergent compliance levels and consequently a
great divergence in the amount of information provided.

Results of this study has shown that IFRS mandatory disclosures are value relevant as the
value relevance of companies with higher compliance is higher than that of the companies
with lower compliance as well as the net income.

Prior research suggest that increased levels of disclosure means more transparent financial
statements and consequently reduce risk about the company.

The paper is organized as follows. Section 2 mentions the literature review and the research
hypothesis. Section three describes the data employed and the research design. Section 4
provides the empirical findings and section 5 concludes.
Value relevance of voluntary disclosure: Evidence from Turkish

firms
The importance of the voluntary disclosure has increased rapidly regarding the research
area in accounting field due to the following reasons:
1. Development of communication tools
2. Stakeholders’ need for more transparency and accountability
3. Corporate governance practices.
Previous studies have focused on the determinants of the voluntary disclosure but didn’t
take into consideration the value relevance of the voluntary disclosure especially in the
emerging markets having high growth potential, relatively weak regulatory environment and
low information disclosure levels causing high information asymmetry between the
management and investors. thus, research is needed in the developing countries in order to
grab the attention of the regulatory bodies and firms’ management and increase the
efficiency of those markets.

Despite the fact that accounting standards and auditors play a role in reducing the
information asymmetry between management and investors. however, they are not
completely efficient. Therefore, voluntary disclosures can help decrease the information gap
and increase the value of accounting information. Prior studies suggest that the higher level
of voluntary disclosure, the higher the value of the firm and the lower the cost of finance.

Although previous studies have focused on examining the association between disclosure
and the firm value. However, there is a little empirical evidence to support this finding. Thus,
this paper aims to contribute to the literature by studying the voluntary disclosure in turkey
which is an emerging market.

The remainder of the paper is organized as follows: literature review is explained in section
2. The hypothesis is developed in section 3. In section 4, the research method is explained.
The result analysis is found in section5 and finally section 6 concludes the paper and
provides limitations and suggestions for future research.