An Investigation of Compliance with the Disclosure Requirements of Related Party Disclosure Standards in Emerging Economies

Abstract

This thesis investigates the factors associated with the quantity of related party transaction disclosures by large publicly listed firms in the emerging markets of Brazil, Russia, India and South Africa (BRIS) using a checklist of disclosure requirements from IAS 24 Related Party Disclosures across three years; 2001, 2006 and 2014. Using four proxies of disclosure, each measuring a different aspect of disclosure, the thesis addresses whether disclosure level is associated with: IFRS adoption; across-time learning effects; audit committee; auditor type; foreign listing; outstanding capital market debt; and ownership concentration. Data are hand-collected from the English-language annual reports of 151 constant firms (453 firm-years) in each of the three sample years. The results suggest that the firm-specific factors examined influence each country’s compliance in different ways. Overall, the findings show that in Brazil and South Africa, the level of related party disclosure is positively associated with the mandatory adoption of IFRS. Across-time learning effect and the existence of outstanding capital market debt matters only in India. In Brazil, a higher level of related party disclosure is associated with the existence of an audit committee whereas in Russia, a positive association exists if firms are audited by a big 4 or 5 auditor. Ownership concentration, on the other hand, is associated with related party disclosure in Russia, India and South Africa. When all countries are combined and controlled for, IFRS adoption, learning effect and the existence of an audit committee are the only factors systematically related to related party disclosure