Operating Segments (IFRS 8)-Required Disclosure and the Specific-Characteristics of Kuwaiti Listed Companies

Abstract

<p>The aim of this article is to assess and examine the operating segment required-disclosure of companies listed on the Kuwait Stock Exchange (KSE) and the influence of certain variables that determine their extent of operating segment disclosures. Similar to the previous studies, the degree of operating segment disclosure is tested based on a disclosure index of the compulsory items of the International Financial Reporting Standard (IFRS) 8 (Operating segment). A regression model is estimated using Ordinary Least Squares analysis for a sample of 150 Kuwaiti companies listed on the KSE at the end of 2013 to examine the relationship between the degree of operating segment disclosure and the specific characteristics of Kuwaiti listed companies. The results reveal that the average level of operating segment disclosure was 54%, ranging from 3% to 95%. The results revealed that Kuwaiti listed companies with a higher level of compliance with the IFRS 8-required disclosures (Operating segment)  were expected to be larger, highly growth and audited by audit firm associated with a Big-4 audit firm. In contrast with the more compliant, Kuwaiti listed companies with a lesser level of compliance with the IFRS 8-required operating segment disclosure were likely to be profitable. In contrast, company age, ownership diffusion, leverage and type of industry, were found to be not influencing the compliance with the IFRS 8-required operating segment disclosure. The findings deliver valuable insights and assistance to the regulatory and enforcement official bodies and to the investors in Kuwait on evaluating the existing operating segment disclosure practice among KSE-listed companies. Since the average level of operating segment disclosure was 54%, this result recommends reviewing the monitoring system of the enforcement of required operating segment disclosure. Additionally, the results provide feedback about the drivers of operating segment disclosures practice.</p>