Jenice J. Prather-Kinsey
University of MissouriColumbia
Danielle Milton
University of MissouriColumbia
Abstract: South Africa practiced apartheid until 1993 (Lemon 2000, Arnold and Hammond 1994). Over $450 billion were divested from South Africa in protest of its practice of segregation (Stevenson 1990). In 1993, apartheid was deemed unconstitutional and South Africa sought economic development through its capital market. In that same year, the Council of The South African Institute of Chartered Accountants and the Accounting Practices Board approved a set of generally accepted accounting principles based on International Accounting Standards (IAS) in an effort to enhance the perceived quality of financial reporting by South African companies. We are interested in whether there is quality financial reporting in South Africa; and if so, the characteristics of those companies. Saudagaran and Diga (1997) contend that the criteria for quality financial reporting can be measured based on the availability, reliability and comparability of financial reports. OLS regression is used to test the association between the quality of financial reporting with Saudagaran and Digas criteria of quality using South African firms. We find that compliance with IASs is significant in explaining quality: the number of analysts following.
REFERENCES Arnold, Patricia, and Theresa Hammond. 1994. The role of accounting in ideological conflict: Lessons from the South African divestment movement. Accounting, Organizations, and Society 19 (2): 111126.
Lemon, Anthony. 2002. South Africa. Microsoft® Encarta® Online Encyclopedia. Available at: http://encarta.msn.com. Microsoft Corporation.
Saudagaran, Shahrokh M., and Joselito G. Diga. 1997. Financial reporting in emerging capital markets: Characteristics and policy issues. Accounting Horizons 11 (2): 4164.
Stevenson, Gelvin. 1990. The complete return on investment. New York Times (25 March): 13.
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