COMPLIANCE WITH IAS 24 RELATED PARTY DISCLOSURES AND AUDIT COMMITTEE EFFICIENCY: EVIDENCE FROM MANUFACTURING FIRMS LISTED ON THE BIST

Öz

Although the International Accounting Standards Board states that over 166 jurisdictions have globally adopted IFRS/IAS, this statement, unfortunately, overlooks the reporting firm's financial statements' actual compliance level. Despite the international accounting communities' continued efforts, there remains a worrying trend of non-compliance within financial statements prepared according to the International Financial Reporting Standards. Serving as a mechanism towards ensuring that the firms' financial reports are understandable, transparent and reliable, and prepared following the current legislation and international accounting standards, the Audit Committee (AC) is uniquely positioned to increase the quality of information produced by organizations. By employing the International Accounting Standard 24 "Related Party Disclosures", this paper aims to empirically measure Turkish manufacturing firms' compliance levels listed on the BIST within 2019. Moreover, the paper attempts to analyze the driving role AC characteristics play in increasing compliance within the firms. It is hoped that the results of this research will hold particular importance for researchers and regulatory agencies in promoting further improvements of the Audit Committee.

Anahtar Kelimeler

• Audit Committee Characteristics
• TMS 24
• Related Party Disclosures
• Disclosure Compliance Analysis
• Manufacturing Firms

UMS 24 İLİŞKİLİ TARAF AÇIKLAMALARINA UYUM VE DENETİM KOMİTESİ VERİMLİLİĞİ: BIST'TE LİSTELENMİŞ ŞİRKETLER ÜZERİNE AMPİRİK BİR ANALİZ

Öz

Uluslararası Muhasebe Standartları Kurulu küresel olarak 166 ülkenin UMS/ UFRS'yi benimsemiş olduğunu beyan etsede, firmaların standartlar ile gerçek uyumluluk düzeyi göz ardı edilmektedir. Uluslararası muhasebe topluluklarının tüm çabalarına rağmen standartlara tam uyum sağlanamamış ve dipnotlarda süregelen uyumsuzluk literatürde tartışma konusu olmuştur. Finansal raporların anlaşılabilir, şeffaf ve güvenilir bir şekilde yürürlükteki mevzuata ve uluslararası muhasebe standartlarına uygun hazırlanmasına yönelik önemli bir görev üstlenen Denetim Komitesinin bilgi kalitesini artırma yönünde fayda sağlayacağı ileri sürülmektedir. Uluslararası Muhasebe Standardı 24 "İlişkili Taraf Açıklamalarını" baz alan bu çalışmada, 2019 yılında BIST'te listelenen imalat şirketlerinin dipnot uyum düzeylerini analiz etmektedir. Buna ek olarak, çalışma şirketlerde uyum düzeyini artırma yönünde Denetim Komitesi karakteristiklerinin rolünü ampirik olarak ölçmeyi amaçlamaktadır. Analiz sonuçlarının Denetim Komitelerinin fonksiyonunun daha da geliştirilmesi amacıyla araştırmacılar ve düzenleyici kurumlar için önem arz edeceği umut edilmektedir.

Anahtar Kelimeler

• Denetim Komite Karakteristikleri
• TMS 24
• İlişkili Taraf Açıklamaları
• Dipnot Uyum Analizi
• İmalat Şirketleri

Kaynakça

1. Abdullah, M., Evans, L., Fraser, I., and Tsalavoutas, I. (2015). IFRS Mandatory disclosures in Malaysia: The influence of family control and the value irrelevance of compliance levels. Accounting Forum, 39(4), 328-348.
2. Agyei-Mensah, B. (2019). "The effect of audit committee attributes on compliance with IAS-24 related party disclosure: an empirical study", International Journal of Law and Management, 18 (5), 779-808.
3. Ahmed, A., Neel, M. and Wang, D. (2012). Does Mandatory Adoption of IFRS Improve Accounting Quality?. Contemporary Accounting Research. 1 (1), 24-48
4. Agyei-Mensah, B. K. (2017). The relationship between corporate governance mechanisms and IFRS 7 compliance: evidence from an emerging market. Corporate Governance: The International Journal of Business in Society. 17 (3), 446-465.
5. Alkurdi, A., Hussainey, K., Tahat, Y., & Aladwan, M. (2019). The impact of corporate governance on risk disclosure: Jordanian evidence. Academy of Accounting and Financial Studies Journal. Online https://www.abacademies.org/articles/the-impact-of-corporate-governance-on-risk-disclosure-jordanian-evidence-7886.html
6. Al-Akra, M., Eddie, I. A., and Ali, M. J. (2010). The influence of the introduction of accounting disclosure regulation on mandatory disclosure compliance: Evidence from Jordan. The British Accounting Review, 42(3), 170-186.
7. Al-Shiab, M. (2003). Financial Consequences of IAS Adoption: The Case of Jordan. University of Newcastle Upon- UK: Tyne.
8. Alanezi, F. S., and Albuloushi, S. S. (2011). Does the existence of voluntary audit committees really affect IFRS-required disclosure? The Kuwaiti evidence. International Journal of Disclosure and Governance, 8(2), 148-173.

9. Al Sawalqa, F. (2014). Corporate governance mechanisms and voluntary disclosure compliance: The case of banks in Jordan. International Journal of Academic Research in Accounting. Finance and Management Sciences, 4(2), 369-384.
10. Baboukardos, D., and Rimmel, G. (2014). Goodwill under IFRS: Relevance and disclosures in an unfavorable environment. Accounting Forum. 38 (1), 1-17.
11. Bananuka, J., Kadaali, A. W., Mukyala, V., Muramuzi, B., and Namusobya, Z. (2019). Audit committee effectiveness, isomorphic forces, managerial attitude and adoption of international financial reporting standards. Journal of Accounting in Emerging Economies. 9(4), 502-526.
12. Beattie, A. McInnes,B. and Fearnley, S. (2004). A methodology for analyzing and evaluating narratives in annual reports: A Comprehensive Description Profile and Metrics for Disclosure Quality Attributes. Accounting Forum 28 (1), 205-236.
13. Bepari, M. K., and Mollik, A. T. (2015). Effect of audit quality and accounting and finance backgrounds of audit committee members on firms’ compliance with IFRS for goodwill impairment testing. Journal of Applied Accounting Research. 16 (2), 196-220.
14. Bepari, M. K., Rahman, F. S., and Mollik, T. A. (2014). Firms' compliance with the disclosure requirements of IFRS for goodwill impairment testing: Effect of the global financial crisis and other firm characteristics. Journal of Accounting and Organizational Change, 10(1), 116- 149.
15. Botosan, A. (1997). Disclosure level and the cost of equity capital. The Accounting Review. 72 (3), 323-350.
16. Cairns, D. (1997). Developing Countries Always on the Agenda. Accountancy, 119(1244), 62-67.
17. Cafaggi, F., and Renda, A. (2012). Public and private regulation: mapping the labyrinth. Online https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2156875
18. Cascino, S., and Gassen, J. (2015). What drives the comparability effect of mandatory IFRS adoption? Review of Accounting Studies, 20(1), 242-282.
19. Cooke, E. (1992). The impact of size, stock market listing and industry type on disclosure in the annual reports of japanese listed corporations, Accounting and Business Research. 22(87), 229 – 237.
20. Davies, J. C. (1983). The effects of federal regulation on chemical industry innovation. Law and Contemp. Probs., 46 (1), 41-58.
21. Daryanto A. (2018). SPSS Heterogeneity Macro. Online https://sites.google.com/site/ahmaddaryanto/scripts/Heterogeneity-test
22. Dawd, I. (2018). Aggregate financial disclosure practice: evidence from the emerging capital market of Kuwait. Journal of Applied Accounting Research. 21(1), 626-647.
23. Ernawati, D., and Aryani, Y. A. (2019). Controlling shareholders, audit committee characteristics, and related party transaction disclosure: Evidence from Indonesia. Jurnal Keuangan dan Perbankan, 23(1), 14-28.
24. El Mahdy, D. F., Hao, J., and Cong, Y. (2019). Audit Committee Financial Expertise and Information Asymmetry. Online https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3423298
25. Ettredge, M., Johnstone, K., Stone, M., and Wang, Q. (2011). The effects of firm size, corporate governance quality, and bad news on disclosure compliance. Review of Accounting Studies, 16(4), 866-889.
26. Fekete, S., Matis, D., and Lukács, J. (2008). Factors influencing the extent of corporate compliance with IFRS-The Case of Hungarian listed companies. Online https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1295722
27. Field, A.P. (2009). Discovering statistics using SPSS: and sex and drugs and rock ‘n’ roll (3rd edition). London: Sage.
28. Goh, L., Joos, P., and Soonawalla, K. (2016). determinants and valuation implications of compulsory stock option disclosures in a weak regulatory setting—the case of France. Journal of International Financial Management and Accounting, 27(1), 26-64.
29. Gordon, E. and Henry , E. (2005). Related Party Transactions and Earnings Management. Online. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=612234
30. Hair, J., Black, W. Babin, B and Anderson R. (2014). Multivariate Data Analysis. Essex: Pearson.
31. Hartwig, F. (2015). Swedish and Dutch listed companies’ compliance with IAS 36 paragraph 134. International Journal of Disclosure and Governance, 12(1), 78-105.
32. Haniffa, R., and Hudaib, M. (2006). Corporate governance structure and performance of Malaysian listed companies. Journal of Business Finance & Accounting, 33(7‐8), 1034-1062.
33. International Accounting Standards Board (2020). About. Online https://www.ifrs.org/
34. Jackson, E. and Roe, J. (2009). Public and Private enforcement of securities laws: resource-based evidence. Journal of Financial Economics (JFE). 93. (1), 15-35.
35. Kabara, A. S., Abdullah, D. F., and Othman, A. (2019). The effect of governance code compliance on audit committee diversity and corporate voluntary disclosure: evidence from dynamic panel approach. Polish Journal of Management Studies, 20 (1), 223-232.
36. Laux, V. and Stocken P. (2013). Accounting Standards, Regulatory Enforcement,and Investment Decisions. University of Texas 1 (1), 1-52.
37. Leuz, C. (2010). Different approaches to corporate reporting regulation: How jurisdictions differ and why. Accounting and Business Research, 40(3), 229-256.
38. Leuz, C., and Wysocki, P. D. (2008). Economic consequences of financial reporting and disclosure regulation: A review and suggestions for future research. Online https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1105398
39. Leuz, C., Triantis, A., and Wang, T. Y. (2008). Why do firms go dark? Causes and economic consequences of voluntary SEC deregistrations. Journal of Accounting and Economics, 45(2), 181-208.
40. Lopes, P. T., and Rodrigues, L. L. (2007). Accounting for financial instruments: An analysis of the determinants of disclosure in the Portuguese stock exchange. The International Journal of Accounting, 42(1), 25-56.
41. Marston, C., and Philip S.. (1996) A review of empirical research into financial disclosure. European Accounting Association meetings, Bergen.
42. Mayorga, D. and Sidhu, B., (2012). Corporate disclosures of the major sources of estimation uncertainties. Australian Accounting Review. 22 (1), 25-39.
43. Mgammal, M. H., Bardai, B., and Ismail, K. N. I. K. (2018). Corporate governance and tax disclosure phenomenon in the Malaysian listed companies. Corporate Governance: The International Journal of Business in Society.18(5), 779-808.
44. Mnif, Y., and Znazen, O. (2020). Corporate governance and compliance with IFRS 7: The case of financial institutions listed in Canada. Managerial Auditing Journal. 35(3), 448-474.
45. Musleh Al-Sartawi, A., Alrawahi, F., & Sanad, Z. (2016). Corporate governance and the level of compliance with international accounting standards (IAS-1): Evidence from Bahrain Bourse. Online https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2898145
46. Nobes, C., (2006). The survival of international differences under IFRS: towards a research agenda. Accounting and Business Research, 36(3), 233-245.
47. Oliveira, J., Rodrigues, L. L., and Craig, R. (2011). Risk‐related disclosures by non‐finance companies. Managerial Auditing Journal. 26 (9), 817-839.
48. Omran, M. A., and Abdelrazik, M. (2013). The association between corporate governance and corporate disclosure: A critical review. Journal of public administration and governance, 3(3), 94-107.
49. Persaud, A. D. (2015). Why do we regulate finance?. Reinventing Financial Regulation (pp. 7-23). Berkeley, CA: Apress.
50. Public Disclosure Platform. (2020). Sektör. Online https://www.kap.org.tr/en/
51. Public Oversight Accounting and Auditing Standards Authority (2020). TFRS TMS Setlerı Online https://www.kgk.gov.tr/Home
52. Rechtschaffen, C. (2007). Shining the spotlight on European Union environmental compliance. Pace Envtl. L. Rev., 24, 161.
53. Santos, E. S., Ponte, V. M. R., and Mapurunga, P. V. R. (2014). Mandatory IFRS adoption in Brazil (2010): Index of compliance with disclosure requirements and some explanatory factors of firms reporting. Revista Contabilidade and Finanças, 25(65), 161-176.
54. Schultz Jr, J. J., and Lopez, T. J. (2001). The impact of national influence on accounting estimates: Implications for international accounting standard-setters. The International Journal of Accounting, 36(3), 271-290.
55. Street, D. and Bryant, S. (2000). Disclosure level and compliance with iass: a comparison of companies with and without u.s. listings and fillings. The International Journal of Accounting, 35 (3), 305-329.
56. Tahat, Y., Mardini, G. H., and Power, D. M. (2017). Factors affecting financial instruments disclosure in emerging economies: the case of Jordan. Afro-Asian Journal of Finance and Accounting, 7(3), 255-280.
57. Talpur, S., Lizam, M., and Zabri, S. M. (2018). Do audit committee structure increases influence the level of voluntary corporate governance disclosures?. Property Management. 36 (5), 544-561.
58. Tsalavoutas, I. (2011). Transition to IFRS and compliance with mandatory disclosure requirements: What is the signal?. Advances in Accounting, 27(2), 390-405.
59. Tsalavoutas, I. Evans, L. and Smith, M. 2010. Comparison of Two Methods For Measuring Compliance with IFRS Mandatory Disclosure Requirements. Journal of Applied Accounting Research. 11(3), 213-228.
60. Tsalavoutas, I., and Dionysiou, D. (2014). Value relevance of IFRS mandatory disclosure requirements. Journal of Applied Accounting Research, 15(1), 22-42.
61. Tsalavoutas, I., Tsoligkas, F., and Evans, L. (2020). Compliance with IFRS mandatory disclosure requirements: a structured literature review. Online https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3513301
62. Taylor, G., Tower, G., Van Der Zahn, M., and Neilson, J. (2008). Corporate governance determinants on Australian resource companies' financial instrument disclosure practices. Asian Review of Accounting. 16 (1), 56-73.
63. Türkiye Muhasebe Standardı 24 (TMS 24) (2019). TMS 24 İlişkili Taraf Açıklamaları. Online https://www.kgk.gov.tr/Portalv2Uploads/files/DynamicContentFiles/T%C3%BCrkiye%20Muhasebe%20Standartlar%C4%B1/TMSTFRS2018Seti/TMS/TMS_24_2018.pdf
64. Wang, X. (2018). Compliance over time by Australian firms with IFRS disclosure requirements. Australian Accounting Review, 29(4), 679-691.