Investigating the Relationship between Firm Characteristics and Mandatory Disclosure Level within the Egyptian Environment

Egypt witnessed continuous developments in accounting regulations which led to a comprehensive set of Egyptian Accounting Standards in June 2006, to be implemented starting from the fiscal year 2007. It is expected that complying with high quality accounting standards would result in more adequate information disclosure. This research aims to identify companies' disclosure level after the compliance with the newly issued Egyptian Accounting Standards, and test the relationship between firm characteristics and mandatory disclosure level in the Egyptian context. Firm characteristics have been divided into three groups: market-related, structure-related and performance related characteristics. The research uses annual reports of 39 companies listed on the Egyptian Stock Exchange for the year ended December 2007. The findings reveal that the average level of mandatory disclosure was 74%, while the maximum disclosure level was 83%. The level of disclosure of mandatory information of the Egyptian listed companies studied was low. The results indicate that further procedures are required by the Egyptian Capital Market Authority to actively enforce and penalize non complying companies. In that case, it is expected that disclosure of the mandatory requirements would reach the 100% level. Furthermore, the results indicate that the firm characteristics with a positive significant relationship with disclosure level are company size, and auditor type, while the factor that had a negative relationship is liquidity. Results reached have been grounded to the fact of the prevailing secretive culture that exists in Egypt