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Joint venture investments: An analysis of the level of compliance with the disclosure requirements of IFRS 12
Author(s) -
Sarquis Raquel Wille,
Santos Ariovaldo,
Lourenço Isabel,
Oscar Braunbeck Guillermo
Publication year - 2021
Publication title -
journal of international financial management and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.818
H-Index - 37
eISSN - 1467-646X
pISSN - 0954-1314
DOI - 10.1111/jifm.12130
Subject(s) - business , accounting , leverage (statistics) , equity (law) , international financial reporting standards , consolidation (business) , compliance (psychology) , materiality (auditing) , joint venture , sample (material) , business administration , psychology , social psychology , philosophy , chemistry , chromatography , machine learning , computer science , political science , law , aesthetics
Abstract This study provides empirical evidence on changes in entities’ reporting of interests in joint ventures from proportionate consolidation to the equity method following adoption of IFRS 11 and their application of the corresponding IFRS 12 disclosure requirements. The sample includes 551 firms from 26 countries affected by the adoption of IFRS 11 (1,858 financial statements). The findings indicate that many firms are not fully complying with IFRS 12 disclosure requirements and that firm‐level characteristics (e.g., size, leverage, and ownership concentration) contribute more to explaining the level of (non)compliance, when compared to country‐level variables (e.g., legal system and emerging versus developed countries). We also find that the level of materiality of joint ventures is positively associated with the level of compliance with IFRS 12 disclosure requirements. Our results contribute to the literature on the determinants of compliance with IFRS Standards disclosure requirements and bring important insights for the post‐implementation review of IFRS 11 and IFRS 12 occurring between 2020 and 2022.