The purpose of this study is to measure the extent of voluntary disclosure in the 2009 annual reports of 108 Shariah‐compliant companies listed on the Kuwait Stock Exchange. The study aims to investigate three categories of voluntary disclosure: overall, conventional and Islamic disclosure.
Voluntary disclosure was measured using a self‐constructed index consisting of 132 items overall, 86 for conventional and 46 for Islamic information items. Annual reports were analyzed using descriptive statistics and t‐tests.
Results suggest that the mean overall voluntary disclosure by Shariah‐compliant companies is 15 percent, but 17 percent and 13 percent for the conventional and Islamic items, respectively. Voluntary disclosure of conventional items is comparable to extant studies, and higher than Islamic items.
The study uses annual reports from 2009 because they were the most recent data available on the listed companies at the beginning of the study. Since this study was undertaken before the Shariah Advisory Council of the Capital Market Authority was established on January 1, 2012, this imposes a limitation. Future study should replicate this study to assess differences with the existence of the Council.
The findings provide evidence that Shariah‐complaint companies lack voluntary disclosure, especially Islamic disclosure information. As a result, the findings should be useful to lawmakers in Kuwait for improving overall disclosure practices by Shariah‐compliant companies. Preparers may use the findings to match the amount of information in their annual reports with other companies to ensure capital sourcing. Investors may use the findings for understanding disclosure behavior of Shariah‐compliant companies in Kuwait. Such findings may assist them to diversify investment portfolios.
This study contributes to extending the Kuwaiti literature on disclosure, and fills a gap in empirical studies on Shariah‐compliant disclosure practices.
Al‐Shammari, B. (2013), "An investigation of voluntary disclosure by Kuwaiti
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