Manual de Control Interno para Cuentas por Pagar Proveedores

79 The VIF measures the degree to which each explanatory variable is explained by the other explanatory variables (Chavent et al. 2006).

80 The VIFs here were: size 1.569; leverage 1.344; liquidity 1.302; profitability 1.048; listing age 1.41.

81 There were a number of missing observations for some variables. For example, use of the logarithm of return on equity as a measure of profitability dropped the loss-making companies from the sample, reducing the total number of observations from 51 to 41.

Table 6.14: Regression Results for Aggregate Disclosure Panel A: Model diagnostics

R R² Adjusted R² Std. Error of the Estimate F Sig.**

.737 .543 .411 .05307 4.099 .002

Panel B: Regression Model

Variable Coefficient T Sig.

Constant 0.169 1.897 0.067

Size 0.491 2.887 0.007**

Auditor Dummy 0.201 1.420 0.166

Leverage 0.028 0.189 0.851

Liquidity -0.069 -0.436 0.666

Profitability -0.215 -1.645 0.110

Years listed 0.145 0.795 0.433

Industry Dummy

Real Estate -0.212 -1.327 0.194

Industrial -0.288 -1.613 0.117

Food -0.074 -0.491 0.627

Note: This table summarises the results of multivariate regression investigating the determinants of aggregate disclosure levels. A** indicates significance at the 1% level (on a two-tailed basis).

Panel A of Table 6.14 indicates that the overall model explanatory power (adjusted R²) for aggregate disclosure is 0.41,that is the seven explanatory variables included in the model explain 41% of variance in the extent of aggregate disclosure level. This extent of explanatory power is similar to that reported in earlier disclosure studies in Kuwait (Al Mutawaa and Hewaidy, 2010 and Al-Shammari, 2011, where figures of 47.8% and 40%

respectively are documented). These figures are, however, higher than many of those found in developed countries (e.g. Meek et al., 1995 and Glaum and Street, 2003 where figures of 35% and 29% were found for US/UK and Germany respectively). Therefore, the evidence can be argued as indicating that the type of independent variables employed in this area are better predictors of aggregate disclosure practices in developing than developed nations.

One possible rationale for this pattern lies in the greater dependence on annual reports in

the developing world, relative to other media sources and outlets (e.g. Naser et al 2003;

Hossain, et al., 1994; Mirshekary and Saudagaran, 2005; Al-Khater, 2007; Zoysa and Rudkin, 2010; Alzarouni et al. 2011) and firms’ attempts to address the needs of a wider and more diverse group of stakeholders in a more predictable way. In any case, the figure is well above the 20% ‘respectable’ result cited in Anderson, et al. (1993) and Abd-Elsalam and Weetman (2003).⁸²

Inspection of Panel B of Table 6.14 reveals that when the explanatory variables are investigated together, firm size (measured by total assets) has a significant positive effect on aggregate disclosure level with p-value of 0.007. The remaining variables (audit type, leverage, profitability, liquidity, listing age and industry) were found to be insignificant in explaining variation in aggregate disclosure. One possible explanation for these results is that large firms in Kuwait are economically important and their pronouncements highly valued by government and investors. In addition, they attract more interest from key external parties and so disclosing additional information in the annual report may reduce public criticism or governmental intervention in their affairs and enhance corporate reputation. The other possible reason may lie in large companies’ greater ability to absorb the extra costs of broader disclosure. In any case this result, which supports hypothesis 1, is consistent with many previous empirical disclosure studies (e.g. Firth, 1979; Chow and Wong-Boren, 1987; Cook, 1992; Meek et al. 1995; Wallace and Naser, 1995; Owusu-Ansah, 1998; Ahmed and Courtis, 1999; Naser et al. 2002; Marston and Polei, 2004;

Alsaeed, 2006; Al-Shammar et al. 2008; Mutawaa and Hewaidy, 2010; Omar 2012; Kribat et al. 2013), despite the differences in regulatory regime and market structures existing in the various research sites.

82 These authors suggest that having an explanatory level (R²) of 20% can be considered “useful” in social science.

The coefficient on the audit type dummy was positive but not significant. This result suggests that, despite prior literature suggesting the likely existence of such a pattern, Kuwaiti non-financial listed companies whose annual reports are audited by one of the Big 4 audit firms do not disclose more information in their annual reports than companies audited by smaller Kuwaiti accounting firms. This result is consistent with Wallace et al.

(1994) in Spain, Barako et al. (2006) in Kenyan, and Al Mutawaa and Hewaidy (2010) in an earlier study of Kuwait.

The leverage coefficient in Table 6.14 was also positive but not significant. This finding is consistent with prior studies (e.g. Belkaoui and Kahi, 1978; Bradbury, 1992; Malone et al., 1993; Naser, 1998; and Al-Shammari et al. 2008; and Omar and Simon, 2011) all of whom found an insignificant positive relationship between leverage and the extent of disclosure.

Liquidity was associated negatively, but again only weakly, with the extent of aggregate disclosure. It has been argued that companies enjoying higher liquidity are likely to disclose more information than those with lower figures (Cook, 1989b), but this does not seem to be the case amongst KSE-listed non-financial firms. However, the finding is consistent with prior international evidence (e.g. Owusu-Ansah, 1998; Leventis and Weetman, 2004; Alsaeed, 2006, Al-Shammari et al. 2008; and Omar and Simon, 2011).

Profitability was not a significant determinant of variation in the extent of aggregate disclosure. This result confirms previous evidence of a relationship between profitability and disclosure extent that is weaker in practice than in theory (e.g. Wallace et al. 1994;

Raffournier, 1995; Ahmed and Courtis, 1999; Marston and Polei, 2004; Leventis and Weetman; 2004; Alsaeed, 2006; Aljifri, 2008; Shammari et al. 2008; and Mutawaa and Hewaidy, 2010). The regression statistics also indicated that no significant relationship exists between industry type and the level of aggregate disclosure; the three dummy

variable all had negative coefficients, but without the significance to suggest that service sector disclosure is substantially higher than in other Kuwaiti industries. However, the evidence is again consistent with the results reported in related studies (e.g. Wallace et al.

1994; Wallace and Naser, 1995; Raffournier, 1995; Naser et al. 2002; Owusu-Ansah, 1998;

Alsaeed, 2006).

Finally, the listing age variable had a positive coefficient, but again no significant relationship was found. Few previous studies have investigated the effect of listing age on the level of disclosure, although Owusu-Ansah (1998) in Zimbabwe and Omar and Simon (2011) in Jordan found a positive relationship between listing age and disclosure level, while Haniffa and Cooke (2002) did not find any such association in Malaysia.

6.3.4.4 Results of the Multiple Regression Analysis (Mandatory vs. Voluntary