Abstract
There has been a global trend of increasing those disclosures which are not defined by International Financial Reporting Standards (IFRS). Non-IFRS disclosures are subjected to a lesser degree of regulation and, therefore, may be prone to opportunistic use. However, the degree of regulatory intervention needs to be balanced against the possibility of impaired value relevance. This study compares two categories of non-IFRS disclosures: those that are voluntarily provided by management (voluntary disclosures); and those that are required by law or regulation but not required by the prescribed financial reporting framework (mandatory disclosures). The study adopts a derivative of the Ohlson (1995) regression model. This model correlates share prices with the book value of net assets and either IFRS, mandatory or voluntary earnings. The data sampled has been restricted to the information disclosed by companies in the mining sectors of the Johannesburg Stock Exchange (JSE) which have previously been shown to have attained the greatest instances of voluntary earnings disclosures (Howard, 2016). The result of this study concurs with prior studies in that voluntary disclosures are perceived to be the most value relevant compared to other forms of disclosures. However, this study also shows that all three types of earnings disclosures, IFRS, voluntary and mandatory earnings disclosures, are attributed a significant amount of value by financial statement users. This study provides support for a careful approach to further regulatory intervention over voluntary disclosures so as not to impair the value attributed to such disclosures. Furthermore, the study supports the call for introducing local regulatory measures; as such, a granular approach to regulatory intervention is considered more practicable based on the identification of common voluntary disclosures amongst companies in the same sector of the market.
Key words: IFRS, non-IFRS disclosures, voluntary disclosures, mandatory disclosures, regulation, value-relevance