An empirical analysis of the determinants of the extent of disclosure in annual reports of joint stock companies in the Czech Republic

Abstract

The paper¹develops and empirically tests a disclosure model for the fifty Czech joint-stock companies that were included in the 1993 Prague Stock Exchange Index. Independent variables are drawn from prior theoretical and empirical research concerning voluntary disclosure. Dependent variables are based on Czech laws and regulations concerning financial disclosures. Univariate analyses generally support the existence of the hypothesized relationships between extent of disclosure in annual reports and firm size, profitability performance, financial risk, and monitoring variables. Multivariate regressions explain about 25% of the variance in the extent of disclosure in annual reports. Statistically significant variables in the multiple regressions include type of auditor, number of employees, stock exchange listing status, and return on equity performance. The results provide initial insights into Czech managements' choices concerning financial reporting and suggest topics for additional research