Compliance with Disclosure Requirements for Interests in Joint Arrangements and Associates: Evidence from Egyptian Listed Companies

Purpose: Previous studies indicate that compliance with International Financial Reporting Standards (IFRS) is not complete in many countries. This study empirically investigates, under the Egyptian version of IFRS, the extent to which listed companies in Egypt comply with disclosure requirements in accordance with Egyptian Accounting Standard No. 44, and provides evidence of factors associated with the level of compliance. The factors examined are sector type, the quality of the audit firm, and foreign activities.
Design/methodology/approach: A disclosure index, which includes 29 items representing disclosure requirements under EAS 44, has been developed to examine the annual reports for the year 2020 for a sample of 99 companies listed on the Egyptian Stock Exchange.
Findings: The results indicate that the overall level of companies’ compliance is 62.5% of the disclosures required by EAS 44. This low level of compliance raises questions about the audit quality in Egypt, and add concerns about the lack of effective oversight in the Egyptian Stock Exchange. It also requires investigating the factors that explain this low level of compliance. Simple and multiple regressions were used to analyze the data and test hypotheses. The study found a significant positive relationship between each of foreign activities, the quality of the audit firm, and the compliance level with EAS 44. Moreover, the study found a significant negative relationship of the sector type and the compliance level.
Research limitations: This study has some limitations: The disclosure index includes only mandatory items; The composition of the items in the disclosure index does not reflect their importance as perceived by users of financial information; The data used to test the company's compliance level and characteristics were collected manually from annual reports.
Originality/value: The results contribute to the literature on compliance, and provide important insights for a post-implementation review by investigating the extent of disclosure by listed companies in Egypt.