Financial Notes Reporting Quality - A Conceptualization and Empirical Analysis of Financial Reporting Quality Using the Example of Notes Reporting on Intangible Assets Under IFRS

For many years, international financial reporting – and in particular the notes reporting – has been criticized in practice and academia for failing to provide information that is appropriate for its intended users. This criticism points to deficits with regard to the content and presentation and, thus, to the overall quality of the notes reporting. However, this criticism is predominantly anecdotal in nature as there is, as yet, scarcely any valid scientific evidence that supports these claims. This work addresses this research gap by elaborating what (notes) reporting quality is, what dimensions it consists of (conceptualization), how these dimensions can be measured (operationalization) and how they are empirically manifested (empirical evidence). For the latent construct of (notes) reporting quality, a formative measuring instrument to be used in an integrative content analysis is developed with which both dimensions of (notes) reporting quality – a content dimension (e.g., relevance) and a formal dimension (e.g., diction/readability) – can be measured and analyzed. This measuring instrument is validated both theoretically (argumentative reflection) and empirically (testing of hypotheses derivable from the underlying theories). The subsequent analysis of the notes reporting quality of a representative sample of German firms reveals that the above-mentioned criticism is well founded. Furthermore, the results point out both what specific deficits exist and where. The results of this work – the conceptualization, the operationalization and the empirical evidence – together form a starting point for developing, in the context of the (notes) reporting and its quality, valid insights/knowledge in research, ‘best practice' solutions in practice and conceptually sound and target-oriented solutions in regulation