Analysis of annual report disclosure quality for listed companies in transition countries

Figures & data

Table 1. Important elements of annual reports with the importance weights and the number of companies that have appropriate annual report elements for transition companies.

Elem.*	C.I.j***	% of companies**					Elem.*	C.I.j***	% of companies**
		CRO	MNG	SERB	SLO	ROM			CRO	MNG	SERB	SLO	ROM
1	1.64	53	93	53	100	53	23	1.46	17	27	57	97	33
2	1.36	70	60	97	100	70	24	1.26	23	17	23	93	33
3	1.48	43	17	100	100	83	25	1.36	10	7	17	67	23
4	1.02	30	23	80	57	80	26	1.36	7	10	10	63	10
5	1.46	67	57	33	100	40	27	1.38	13	7	3	60	33
6	1.58	10	7	17	90	37	28	1.48	13	10	7	63	53
7	1.48	13	17	0	70	30	29	1.46	10	10	17	77	33
8	2	17	20	0	93	10	30	1.52	7	7	0	57	23
9	1.22	33	10	33	70	7	31	1.5	3	7	7	80	30
10	1.18	10	*	*	*	*	32	1.6	67	7	43	97	23
11	1.18	63	67	47	97	47	33	1.6	23	7	53	90	27
12	1.22	63	63	27	90	40	34	1.7	63	23	80	97	27
13	1.24	23	3	7	100	20	35	1.8	83	10	57	97	70
14	1.34	10	10	10	83	30	36	2	93	97	100	100	87
15	1.48	13	10	60	87	20	37	2	93	100	100	100	87
16	1.34	3	10	13	73	40	38	2	97	87	97	100	83
17	1.54	3	7	53	70	33	39	2	97	73	97	93	77
18	1.52	0	3	50	77	43	40	2	83	53	97	100	30
19	1.6	0	3	20	83	40	41	1.68	83	100	87	87	23
20	1.4	47	63	50	87	37	42	2	70	20	90	100	10
21	1.64	20	57	60	87	23	43	1.66	40	7	67	90	30
22	1.44	7	20	50	50	47	44	1.16	60	80	87	100	100

* Elements: 1-Executive summary and key financial indicators; 2-Company profile; 3-Business activities; 4-Short company review; 5-The most important achievements in the reporting year; 6-Position on the business market; 7-Report by the supervisory board; 8-Report by the management board; 9-Code of Corporate Governance (CCG); 10-Annual survey of the CCG; 11-Management board members; 12-Members of the supervisory board; 13-The authority of company bodies; 14-Organisational structure; 15-Expectations for future periods; 16-The mission and vision of the company; 17-Corporate strategy; 18-Relationship to stakeholder group - customers; 19-Relationship to stakeholder group - shareholders; 20-Major shareholders; 21-The report on the movement of company shares; 22-Relationship to stakeholder group – suppliers; 23-Relation to employees; 24-Structure of employees; 25-Corporate social responsibility; 26-Company contributions to economic prosperity; 27-Environmental protection; 28-Quality management; 29-Business environment risk; 30-Competition risk; 31-Industry risk; 32-Liquidity risk; 33-Business risk; 34-Accounting policies; 35-Financial indicators; 36-Balance sheet; 37-Income statement; 38-Cash flow statement; 39-Statement of changes in equity; 40-Notes in financial statements; 41-Responsibility for the financial statements; 42-Independent auditor’s report; 43-Events after the balance sheet date; 44-Contact information.

** CRO-Croatia; MNG-Montenegro; SERB-Serbia; SLO-Slovenia; ROM-Romania.

*** C.I._j- The importance coefficient of the annual report elements.

Source: Calculated according to data from: http://www.belex.rs; http://www.bvb.ro; http://www.ljse.si; http://www.montenegroberza.com; and http://www.zse.hr.

Table 2. Quality of annual reports for listed companies of transition companies.

DQI	Quality of annual report	Croatia		Montenegro		Serbia		Slovenia		Romania
		No	%	No	%	No	%	No	%	No	%
0–20	Poor	3	10	4	13	0	0	0	0	9	30
21–40	Low	8	27	22	73	5	17	0	0	7	23
41–60	Average	16	53	1	3	21	70	0	0	7	23
61–80	Sufficient	3	10	3	10	4	13	10	33	4	13
81–100	High	0	0	0	0	0	0	20	67	3	10
Total		30	100	30	100	30	100	30	100	30	100

Source: Calculated according to data from: http://www.belex.rs; http://www.bvb.ro; http://www.ljse.si; http://www.montenegroberza.com; and http://www.zse.hr.

Table 3. Results of the Kruskal-Wallis test for listed companies in the selected countries.

Test variable	Mean ranks					Kruskal-Wallis test p-value
	Croatia	Montenegro	Serbia	Slovenia	Romania
Disclosure quality index	65.60	41.13	79.95	132.25	58.57	<0.001
Return on assets (ROA)	66.47	65.17	93.42	65.00	72.89	0.057
Return on equity (ROE)	60.93	54.30	94.15	69.80	86.93	0.001
Debt ratio	84.13	55.67	78.31	51.63	102.29	<0.001
Coefficient of own funding	66.17	105.33	75.63	64.87	65.50	0.001
Net profit margin	77.77	71.55	60.26	69. 39	72.77	0.591

Source: Tested according to data from: http://www.belex.rs; http://www.bvb.ro; http://www.ljse.si; http://www.montenegroberza.com; and http://www.zse.hr.

Table 4. Types of preference function, weights and companies’ ranking according to the DQI and selected financial performance indicators by the multi-criteria Promethee II method.

	Criteria
CRITERIA	ROA	ROE	Debt ratio	Coefficient of own funding	Net profit margin	Disclosure quality index
Min/Max and Type	max**	max**	min*	min*	max**	max**
Indifference/Gaussian Threshold	0.05	0.01	0.50	0.50	0.50	0.50
Weight	16.3	16.3	16.3	16.3	16.3	18.5
		Number of companies in %
		Croatia	Montenegro	Serbia	Slovenia	Romania
Percentiles 0–20:		3	7	10	73	7
Percentiles 80–100:		17	13	17	0	53

^** Gaussian preference function

^* U-shape preference function.

Source: Calculated according to data from: http://www.belex.rs; http://www.bvb.ro; http://www.ljse.si; http://www.montenegroberza.com; and http://www.zse.hr.