The impact of economic reforms on corporate financial disclosure in Libya during a transition period 2005-2012 : a multiple case study & an individual company case study

This case study research aimed to investigate the impact of five economic reform events namely privatisation, investment fund, listing on Libyan Stock Market, business laws reform and anti-corruption committees on the extent of corporate financial disclosure (CFD) over the transition period 2005-2012. A disclosure index based mainly on IFRS was adapted, annual reports of Libyan stock companies were scored to their disclosures over the period pre-and post the economic events, embedded multiple and individual company case studies used to capture the effect of each economic event. The findings showed that the extent of CFD has increased due to the economic reform events. It was found that the investment fund as a block holder played a beneficial role in promoting the CFD during the phase of transition. It also found that the external auditors promoted and facilitated the reporting practice through their opinions. The findings are consistent with stakeholder and agency theories. It was noted that the presence of investment fund and government as block holders provides Libyan companies with incentives to comply with the external auditors’ requests that based on legislations and IFRS disclosure requirements. These findings have important implications for policy makers and government as they contribute to the debate on the choice between IFRS versus other accounting standards. The study also draw attention to a potential agency problem, which might affect success of privatisation plans. This is the first study to examine the CFD in Libya pre-and post the implementation of economic reform plans. Prior evidence indicates a low level of disclosure but this study demonstrates an improvement in line with the study predictions that suggested the economic reform events promoted the CFD over the phase of transition