Financial Reporting Quality in Nordic Countries : A study of 62 publicly listed companies from Finland, Sweden and Denmark
Kapoor, Shashvat (2016)
Kapoor, Shashvat
Jyväskylän ammattikorkeakoulu
2016
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2016121220077
https://urn.fi/URN:NBN:fi:amk-2016121220077
Tiivistelmä
The aim of this research was to identify the influence that corporate governance characteristics of a firm have on the quality of financial information provided to its stakeholders, specifically for Nordic countries (Finland, Sweden and Denmark). Analysis was performed based on firm-level secondary data. The main research objective was to ascertain whether there exist potential causal relationships between the characteristics of a firm’s board of directors and the executive team, and the respective amount of discretionary accruals, which is used as a measure of the quality of financial information – a high discretionary accrual amount representing lower financial information quality.
Theoretical and empirical literature was collected from diverse literature including research articles, corporate reports and statements, regulatory reports and papers published by professional organizations. Compiled secondary data, on the other hand, were obtained from the audited annual statements and reports of the chosen 62 publicly listed firms in Finland, Sweden and Denmark for the fiscal year of 2015. SPSS program was used to do both descriptive and inferential analysis using the data in order to identify causal relationships between the variables involved.
The result indicated that the ratio of performance pay to fixed pay of an executive team significantly and positively affects the amount of discretionary accruals at the firm level, thus lowering the quality of financial data. Furthermore, the experience of board members serving in a firm affects the quality of financial reporting adversely. Several other control variables also affect the amount of discretionary accruals, such as the number of other directorship positions a firm board member holds in other firms (positive relationship) and the education background of the board members (negative relationship).
Theoretical and empirical literature was collected from diverse literature including research articles, corporate reports and statements, regulatory reports and papers published by professional organizations. Compiled secondary data, on the other hand, were obtained from the audited annual statements and reports of the chosen 62 publicly listed firms in Finland, Sweden and Denmark for the fiscal year of 2015. SPSS program was used to do both descriptive and inferential analysis using the data in order to identify causal relationships between the variables involved.
The result indicated that the ratio of performance pay to fixed pay of an executive team significantly and positively affects the amount of discretionary accruals at the firm level, thus lowering the quality of financial data. Furthermore, the experience of board members serving in a firm affects the quality of financial reporting adversely. Several other control variables also affect the amount of discretionary accruals, such as the number of other directorship positions a firm board member holds in other firms (positive relationship) and the education background of the board members (negative relationship).