An Investigation of Greek Firms' Compliance to IFRS Mandatory Disclosure Requirements

The paper investigates the compliance with IFRS disclosure requirements and ultimately the quality of financial statements. Using a checklist based on the IFRS disclosure requirements, a compliance score was calculated for a sample of 58 listed, non-finance, Greek firms for the 2006 and 2008 financial statements. Disclosure compliance was measured under the “dichotomous approach” and the “partial compliance unweighted method”. Subsequently, univariate tests and a multivariate regression model were used to investigate what firm characteristics are related with disclosure compliance. Closely-held firms exhibit higher compliance rate, while disclosure compliance is not associated with firms' profitability, leverage and size. There is a positive association between the engagement of a Big-4 international auditing firm and the compliance rate. This study can be of interest to accounting regulators who set disclosure requirements and capital market participants by providing indication regarding Greek firms' compliance with IFRS disclosure requirements. In addition, it examines the disclosure compliance with the important disclosure items of all IFRS rather than focusing in the disclosure items of specific IFRS. By adopting both approaches proposed in literature for measuring compliance, the authors enhance the robustness of the findings of this study, while the authors provide empirical evidence concerning the extent to which the two approaches provide significantly different results. The authors found that the two methods do not produce significantly different results.