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Corporate governance and provisions under IAS 37

Ece Acar (Faculty of Business, Yasar University, Izmir, Turkey)
Serdar Ozkan (Department of Accounting, American University of the Middle East, Kuwait City, Kuwait)

EuroMed Journal of Business

ISSN: 1450-2194

Article publication date: 2 May 2017




The purpose of this paper is to illustrate the extent of disclosure of provisions reported under IAS 37 provisions, contingent liabilities and contingent assets and explore the relation between provisions and corporate governance.


The current research utilizes a panel data analysis using a sample of 1,078 firm-year observations from Borsa Istanbul between the years 2005 and 2010.


Overall findings indicate that 62 percent of 1,078 firm-year observations recognize provisions, and among those, only 32 percent provide IAS 37’s full disclosure requirements. Firms that recognize provisions have larger board of directors and are more likely to be characterized with concentrated ownership and institutional owners. Also, firms with larger board of directors, greater independence and concentrated ownership have higher total provision/total debt ratios. Finally, firms that make full disclosure of provisions are more likely to have larger boards, higher ownership concentration and institutional owners and less likely to have CEO duality.

Research limitations/implications

As with all research, there are several limitations of this study. The study suffers from a lack of literature about provisions under IAS 37. The lack of literature directly focusing on provisions or IAS 37 appears to be one of the main limitations as well as one of the main contributions. Since this study focuses on one country, the comparison is not possible. Further research may contribute to literature by the use of other emerging economy’s capital market data. Moreover, further research can cover any other mandatory disclosure information specified in IASs/IFRSs and can provide comparative results about the compliance and strictness of the mandatory disclosure regime.

Practical implications

This study can be of interest to government, investors, business management, regulatory bodies, educators, researchers, accountants, auditors and scholars particularly in the field of accounting by seeking to make theoretical and practical contributions in the area of accounting disclosures and also serves as benchmark for future researches on corporate disclosures. Also this study provides significant insights to accounting regulators who set disclosure requirements.


Accurate corporate reporting is a necessary tool for the short- and long-term survival of the firms, hence the capital markets. Studying the level of disclosure will enable us to have additional insights about corporate reporting and will enhance the understanding of the nature of corporate reporting in developing countries. Disclosure practices by developing countries were empirically investigated in the past; however, the relation between provisions under IAS 37 and corporate governance has been unexplored in the literature. Thus, to the best of the authors’ knowledge, this is a pioneering research on provisions and corporate governance structure.



Acar, E. and Ozkan, S. (2017), "Corporate governance and provisions under IAS 37", EuroMed Journal of Business, Vol. 12 No. 1, pp. 52-72.



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Copyright © 2017, Emerald Publishing Limited

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