IFRS compliance and corporate governance attributes of Maltese listed companies : an analysis

Abstract

PURPOSE: The purpose of this study is to determine the extent of compliance with IFRS disclosure requirements and to analyse any potential areas of non-compliance of selected Maltese Listed Companies. Additionally, this study aims to explore any CG attributes that may significantly impact the extent of IFRS compliance by Maltese Listed Companies. DESIGN: A quantitative methodology was adopted to achieve the objectives of the study. A dichotomous approach was applied to assess the extent of IFRS compliance by selected MLCs. Moreover, the significance and potential impact of CG attributes were explored using a General Linear Model. FINDINGS: The findings indicate that non-compliance with IFRS disclosure requirements is evident among MLCs. None of the selected MLCs achieved full compliance with all of the selected accounting topics. Moreover, the findings also indicate that CG attributes, namely Board of Directors’ size and managerial ownership, are significant in determining the extent of IFRS compliance. CONCLUSIONS: The study concludes that achieving full compliance with IFRS disclosure requirements in Malta necessitates further efforts. Enhancing the monitoring and enforcement mechanisms for proper adherence with IFRS disclosure requirements is crucial to progress towards full compliance. Indeed, CG attributes can serve as effective monitoring mechanisms in financial reporting, along with continuous education and training for local professionals to enhance the extent of IFRS compliance. IMPLICATIONS: This study aims to provide useful information to various stakeholders such as the Accountancy Board, the MFSA and local professionals, on the extent of compliance with IFRS disclosure requirements. This study aims to raise awareness among concerned stakeholders regarding specific areas of IFRS with low levels of compliance. Additionally, it also raises awareness among MLCs regarding the importance of significant CG attributes in enhancing IFRS compliance. The proposed recommendations may encourage MLCs to improve their disclosure of information in line with IFRS disclosure requirements.