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Corporate reporting and disclosures in the emerging capital market of Kuwait: the perceptions of users and preparers

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Abstract

The objective of this paper is to investigate the perceptions of users and preparers regarding financial disclosure practices in annual reports of Kuwaiti listed firms. To measure participants’ views, a questionnaire survey was distributed in Kuwait between October and December 2012, to preparers (financial managers) and users (financial analysts) within Kuwaiti listed companies. The study compares between the perceptions of financial managers and financial analysts regarding disclosing information in corporate annual reports as well as the main obstacles facing the disclosure process and what the problems restricting the use of companies’ annual reports. The study also seeks to investigate whether there is a perceived need for improving the usefulness of Kuwaiti companies’ annual reports for decision-making. The results, based on 137 responses, indicate that accounting practices in Kuwaiti firms are firmly rooted in a decision-usefulness tradition with management and the board of directors viewed as the key audience for reporting information. Indeed, the annual reports of Kuwaiti listed companies are perceived as the most important sources of information. On the whole both users and preparers shared similar concerns regarding the volume of information contained within annual reports; however, their views differed in terms of identifying potential solutions. The results of the study are likely to have implications for decision makers, the academic community and accounting standard setters.

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Notes

  1. The Gulf Cooperation Council (GCC) includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE.

  2. Financial analysts are chosen from brokerage firms or who usually employing for commercial banks, investment companies and investment consulting centres. The researcher approached these organisations to collect as much as possible of point of view of these financial analysts.

  3. Arabic is the official language in Kuwait. However, English is the language widely used and understood in business. In addition, some respondents were born overseas and they used English as their first language.

  4. Explains the possible purposes were selected primarily on the basis of a review of previous literature (e.g. Al-Mubarak 1997; Kribat 2009).

  5. The characteristics included in this section were drawn from the IASC Conceptual Framework for the Preparation and Presentation of Financial Statements issued in 1989. The use of this framework rather than the 2010 framework was explained in “Financial reporting environment in Kuwait” section as reflecting the Kuwaiti accounting profession limited ability to keep up with developments; accountants in Kuwait are generally not familiar with new framework adopted in 2010 and the 1989 document is the one most relevant in practice.

  6. It should be noted that these earlier studies include all industrial sectors, while the present one focuses exclusively on non-financial companies.

  7. These possible problems were selected based on previous literature (e.g. Mirshekary and Saudagaran 2005; Zoysa and Rudkin 2010).

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Authors and Affiliations

  1. College of Business and Economics, Qatar University, P.O. Box: 2713, Doha, Qatar

    Issa Dawd

  2. School of Business, University of Dundee, Dundee, UK

    Bruce Burton & Theresa Dunne

  3. Public Authority for Applied Education and Training, Kuwait City, Kuwait

    Hesham Almujamed

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  1. Issa Dawd
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  2. Bruce Burton
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  3. Theresa Dunne
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  4. Hesham Almujamed
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Correspondence to Issa Dawd.

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Dawd, I., Burton, B., Dunne, T. et al. Corporate reporting and disclosures in the emerging capital market of Kuwait: the perceptions of users and preparers. Int J Discl Gov 15, 61–72 (2018). https://doi.org/10.1057/s41310-018-0036-0

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