LAW AND REPORTING COMPLIANCE CONFIDENCE

Abstract

This study investigates the relationship between investor protection and the reporting compliance confidence in 24 countries, reported in an EY’s survey. In particular, we examine whether differences in investor protection across countries are related to confidence in reporting compliance, reporting complexity in terms of number of reporting standards, and number of reports issued. The results suggest that firms in countries with stronger investor rights have more reporting standards to comply with, and that these firms also have an increase in reporting demand from stakeholders as compared to firms in countries with weaker investor rights. We provide empirical evidence that the strength of investor rights has a significant effect on reporting quality and practices, whereas the strength of legal enforcement does not have the same effect.