Drivers of mandatory disclosure in GCC region firms

Purpose: This paper aims to investigate firm-level variations in the extent of mandatory disclosures and address the drivers of mandatory disclosure using data from the Gulf Co-operation Council (GCC) region. Design/methodology/approach: The extent of mandatory disclosure is examined using a disclosure index created with reference to 24 International Financial Reporting Standards (IFRSs). Findings: The authors find that the extent of mandatory disclosure required by applicable IFRSs/International Accounting Standards increases with international presence, group firms, the level of voluntary disclosure, firm age and the education level of company financial controllers. It decreases with firm size and the proportion of institutional share ownership. The degree of board independence is positively related to the level of mandatory disclosure in firms with no state ownership. Profitability positively affects the level of mandatory disclosure to a greater extent in more liquid GCC firms. The results confirm that there is a greater sensitivity of mandatory disclosure to loss than to profit. Loss increases, whilst profit decreases, the extent of mandatory disclosure. Research limitations/implications: The results promote further understanding of international financial reporting differences in an emerging country setting. Practical implications: The findings provide a detailed insight to investors, financial analysts, practitioners and academics. Originality/value: The authors develop a highly granular mandatory disclosure index in a developing country setting and identify key drivers of such disclosure