Philippine E-Journals

Firm Size as Predictor of Compliance to International Financial Reporting Standards (IFRS) 8

William T. Sucuahi

Discipline: Business, Management

 

Abstract:

Globalization and diversification are the trends of business nowadays. Compa­nies’ diversification will lead to complexity of financial information and investment decision. The objective of this study is to determine the level of compliance with International Financial Reporting Standard (IFRS) 8 and to determine other related segment information to formulate investment strategies. The subjects of the research were the 100 diversified publicly-listed companies in the Philippines with 2010-2011 annual financial reports. Segment Disclosure Index (SDI) was developed to deter­mine the level of compliance with IFRS 8. The study used firm size, company age, audit quality, profitability, leverage, growth and industry as predictors of the level of compliance. The result shows high overall level of compliance with IFRS 8 – Operat­ing segment. Using multiple regression analysis, it was found out that only firm size predicts the level of compliance with IFRS 8. Large companies mostly comply with disclosure requirement stated in IFRS 8 compared to smaller companies. Most of the companies are engaged in real estate development and leasing business.