Research on the quality of the narrative information of the annual report has long been dominated by a lack of tools that permit an objective analysis of qualitative disclosure. This study is focused on accounting disclosure quality research which proposes a comprehensive index that uses Key Performance Indicators (KPIs) to enhance understanding of the quality of narrative information disclosure during the period of 2002 to 2007, throughout firms operating in the European (EU) and USA (US) context.
We use previous research made from Garefalakis et.al., (2016) to underscore the relation between the Management Commentary Index and the Weighted Management Commentary Index with several interpretive variables that place emphasis on attributes of Firms’ Volume and Book Value, Corporate Governance, etc. regionally. Our results show that the region forced to comply with mandatory requirements (e.g., the US) will not provide a greater amount of disclosure information in their MCF reporting than the regions that are not required to comply with these disclosure guidelines (e.g., Western Europe and Northern Europe).
Keywords: Narrative Disclosure, financial reporting quality, Geographical IFRS Analysis