Financial reporting practices of Serbian corporate groups: Compliance with global professional regulations

Abstract

In this study, we analyze compliance with global professional regulations on a sample of Serbian joint-stock parent companies, focusing on the selected disclosures in their consolidated financial statements. Providing relevant and transparent information on the corporate group as a whole, consolidated financial statements are proclaimed to be useful information sources for the existing and potential capital providers of parent companies. Conformity with global professional accounting regulations is seen as an important prerequisite of high-quality financial reporting. However, country and entity-specific factors remain influential, resulting in financial statements of differing features. Lacking intense regulatory and market pressures, the management of Serbian corporate groups appears not to be strongly committed to achieving prime-quality disclosures in consolidated financial statements. We find that the differences in compliance levels of analyzed companies could be explained by the differences in the size of the parent company, its ownership structure, type of auditor and profitability of the group. The results of our research may be useful for investors, corporate managers, regulators and future researchers looking at the quality of consolidated financial reporting.