Are financial reporting judgement disclosures by JSE-listed companies ambiguous?

PurposeThis study examines the ambiguity of financial reporting judgement disclosures of South African listed companies (including whether these disclosures are boilerplate).MotivationApplying International Financial Reporting Standards (IFRSs) requires judgement, which may increase measurement uncertainty and decrease the decision-usefulness of financial information. However, transparent disclosures regarding financial reporting judgements could mitigate these risks.MethodologyQuantitative content analysis, using a self-developed disclosure checklist and Likert scales, was performed for 104 companies during 2020–2023 to measure the ambiguity of financial reporting judgement disclosures when applying selected IFRSs.Main findingsCompanies generally displayed low ambiguity when disclosing financial reporting judgements associated with financial instruments, group-related accounting, leases, depreciation, goodwill and investment property. Average to high disclosure ambiguity was detected regarding fair value measurement, revenue recognition and provisions. Significant differences in ambiguity were identified based on the year, company size and industry.Managerial impactIt is recommended that management and audit committees annually reassess their disclosure practices relating to financial reporting judgements to augment the decision-usefulness of annual report disclosures and reduce boilerplate disclosures.NoveltyThe study focuses not on mere disclosure compliance but on the ambiguity of disclosures relating to financial reporting judgements in a period encompassing a global pandemic, to assess the usefulness of disclosures for decision-making.