Original Research

Regulation and valuation of non-International Financial Reporting Standards disclosures

Sadhir Issirinarain, Michael Adelowotan, Marybeth Rouse
Journal of Economic and Financial Sciences | Vol 16, No 1 | a885 | DOI: https://doi.org/10.4102/jef.v16i1.885 | © 2023 Sadhir Issirinarain, Michael Adelowotan, Marybeth Rouse | This work is licensed under CC Attribution 4.0
Submitted: 22 April 2023 | Published: 23 November 2023

About the author(s)

Sadhir Issirinarain, School of Accounting, College of Business and Economics, University of Johannesburg, Johannesburg, South Africa
Michael Adelowotan, School of Accounting, College of Business and Economics, University of Johannesburg, Johannesburg, South Africa
Marybeth Rouse, School of Accounting, College of Business and Economics, University of Johannesburg, Johannesburg, South Africa

Abstract

Orientation: Globally, non-International Financial Reporting Standards (non-IFRS) disclosures have gained prominence. The International Accounting Standards Board (IASB) is in the process of deciding on the appropriate degree of regulation over such disclosures.

Research purpose: This study investigated the value relevance and the extent of regulation required for non-IFRS disclosures.

Motivation for the study: Non-IFRS disclosures may be prone to opportunistic use.

Research approach/design and method: This study used panel regression to compare two categories of non-IFRS disclosures: voluntary disclosures and disclosures required by regulations other than accounting standards (mandatory disclosures), with the equivalent IFRS disclosures. This study was limited to the mining sectors that were identified as the most significant contributors to non-IFRS disclosures. Earnings disclosures were used as a proxy because of their prominence in the market.

Main findings: All forms of disclosures, IFRS, voluntary and mandatory disclosures, were found to be value relevant. The empirical findings further suggest that voluntary disclosures were the most value relevant of these disclosures.

Practical/managerial implications: This study supports a careful approach to further regulation over voluntary disclosures so as not to impair its value relevance. There is, however, an opportunity for reporting jurisdictions to implement local regulatory measures based on the identification of common voluntary disclosures among companies within the same sector.

Contribution/value-add: This study contributes towards the future standard setting of voluntary disclosures and uniquely compares the value relevance of IFRS earnings disclosures and non-IFRS earnings disclosures from a South African perspective.


Keywords

earnings; non-IFRS; voluntary disclosures; mandatory disclosures; regulation; standards; value relevance.

JEL Codes

M41: Accounting

Sustainable Development Goal

Goal 9: Industry, innovation and infrastructure

Metrics

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