Corporate Governance and the Timeliness of Financial Reporting: A Comparative Study of Selected EU and Transition Economy Countries

14 Pages Posted: 11 May 2008

See all articles by Robert W. McGee

Robert W. McGee

Fayetteville State University - Department of Accounting

Danielle N. Igoe

KPMG, USA

Date Written: May 2008

Abstract

Timeliness of financial reporting is an attribute of good corporate governance. Shareholders and other stakeholders need information while it is still fresh and the more time that passes between year-end and disclosure, the more stale the information becomes and the less value it has.

Corporate governance is a relatively new concept for transition economies. Prior to the fall of the Berlin Wall and the collapse of the Soviet Union there were no profit-making corporations, no shareholders and no need to report financial results except to the government. All that has changed. In order to raise capital, corporations need to convince potential investors that an investment in their company will be safe. That requires financial reporting standards that can be trusted and financial information that is reported in a timely manner. But the culture of former communist countries is not to disclose information. That mentality is changing as their formerly closed economies open up to investment from the west.

This paper examines the timeliness of financial reporting in several transition economies that are new European Union members and makes comparisons to companies in four older members of the EU. The goal of the paper is to determine whether there is a significant difference in the timeliness of financial reporting between the two groups of companies. The paper also reports on the relative market share of the accounting firms that audit companies in the European transition economies.

Keywords: timeliness, financial reporting, accounting, corporate governance, GAAP, transition economy, Czech Republic, Estonia, Hungary, Lithuania, Poland, Romania, Slovenia, Germany, UK, United Kingdom, France, Italy

JEL Classification: M4, O52, D8, G34, K22

Suggested Citation

McGee, Robert W. and Igoe, Danielle N., Corporate Governance and the Timeliness of Financial Reporting: A Comparative Study of Selected EU and Transition Economy Countries (May 2008). Available at SSRN: https://ssrn.com/abstract=1131331 or http://dx.doi.org/10.2139/ssrn.1131331

Robert W. McGee (Contact Author)

Fayetteville State University - Department of Accounting ( email )

Fayetteville, NC 28301
United States

HOME PAGE: http://robertwmcgee.com

Danielle N. Igoe

KPMG, USA ( email )

United States

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