The effectiveness of the financial reporting supply chain in three Maltese public listed companies : selected local stockbrokers' perspectives

Abstract

The financial reporting supply chain involves four interlinked processes. These are: corporate governance; financial reporting process, the audit of financial statements; and, the usefulness of financial statements. The purpose of this study is to explore the levels within each process in the selected Maltese public listed companies, and also to investigate the selected local stockbrokers' perceptions on the effectiveness of this supply chain. In-depth interviews were carried out with: three selected Maltese public listed companies; their auditors; and, four selected licensed stockbrokers. A discussion of the findings revealed that although corporate governance, the preparation of financial reporting and the audit have improved over the years, the usefulness of financial statements have not improved, mainly due to complexity and lack of clarity issues in the financial statements. Stockbrokers feel that each process is an important factor in strengthening the effectiveness of the FRSC. However, in doing so, financial statements should be simplified and clarified further to be more understandable. Also, they should provide more forward-looking information.