Management commentary in Maltese listed companies : a preparers' perspective

Abstract

Purpose: The purpose of this study is to analyse the MC being produced by the Maltese Listed Companies in accordance with the IFRS Practice Statement: Management Commentary, and to identify any potential problems in the write up of the Commentary. Design: An inductive approach was used to undertake this study. Semi-structured interviews were chosen as the main research tool for this dissertation. Due to the nature of the dissertation, the participants chosen belong to those Listed Companies that produce the Management Commentary. Semi- structured interviews were conducted with ten Listed Companies. Findings: The study shows that few are the companies that know of the existence of the IFRS Practice Statement: Management Commentary issued in 2010 by the IASB, the researcher also identified certain barriers which were common to the majority of the participants; these include the language barrier- questioning whether the MC should be done in either the English or Maltese. The issue of the fear to disclose forward looking information due to fear of competitive disadvantage and the fear of non-deliverance- And the need for level playing field. Conclusion: Through this study one can see that using the MC is beneficial for both the company and the users since there would be an increase in communication between the latter and also an enhancement of the financial reporting. The barriers identified in the research can be also useful for preparers to improve their situations and to continue providing effective information for the users to make informed decisions. Implications: The benefits of the Management Commentary should persuade companies that delaying their response with regards to the barriers being faced could well be a serious error - applying the guidelines published