Title: Company characteristics and compliance with IFRS's practice statement (management commentary) by listed companies in Bahrain

Authors: Prem Lal Joshi; Ashutosh Deshmukh; Hemangini Deshmukh

Addresses: Faculty of Management, Multimedia University, BR 2011, Cyberjaya, KL, Malaysia ' Sam and Irene Black School of Business, Pennsylvania State University, Erie, PA16563, USA ' Mercyhurst University, Erie, PA 16546, USA

Abstract: The purpose of this paper is to examine the factors influencing the voluntary compliance with the IFRS Practice Statement Management Commentary by listed companies in Bahrain in their 2010-2011 annual reports. The statistical analysis shows that there is a moderate tendency to comply with the practice statement. The compliance levels range from 40% to 97% with an average of 72.4%. The profitability, financial leverage, and industry types have positive and significant relationships with the disclosure in management commentary. But the board size affects the disclosures negatively. The compliance pattern suggests that most firms, on average, place greater emphasis on disclosures regarding the internal workings of the firm but less emphasis on the external factors and influences. Overall, the firms have complied with many aspects of the management commentary. We identify two areas - 'resources, risks and relationships' and 'performance measures and indicators' - where compliance can be improved.

Keywords: Bahrain; voluntary compliance; resources; risks; performance measures; disclosure; IFRS Practice Statement Management Commentary; International Financial Reporting Standards; annual reports; profitability; financial leverage; industry types; board size.

DOI: 10.1504/IJMFA.2013.058659

International Journal of Managerial and Financial Accounting, 2013 Vol.5 No.4, pp.350 - 366

Published online: 21 Oct 2014 *

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