oa Business Management Review - Financial disclosure in emerging capital markets

Volume 8, Issue 1
  • ISSN : 0856-2253



One of the major steps taken in 'Tanzania in the financial sector liberalization and reform was the establishment of the capital market and the Dar es Salaam Stock Exchange. (DSE). The establishment of the capital markets has led to four stocks and one bond to be listed on the stock exchange. While information disclosure usually follows the TSSPA and the International standards, many of the firms do not follow all the disclosure requirements to allow investors to make realistic choices on which financial assets to invest. The issue of concern of this research was whether financial disclosure improved after the establishment of the capital markets. In other words have the companies listed on the stock market improved or changed their financial findings of research reporting. This paper presents carried out between March -July 2001. It examines and appraises the financial reporting practices in the country after the introduction of the capital markets. In examining the influences of capital markets reforms, the study was conducted to answer the research questions like: do companies disclose more information after the introduction of capital markets?; are companies' disclosures more timely after the introduction of capital markets?: do companies produce and provide more reliable information after the introduction of capital markets than before?; and does the introduction 0 f capital markets lead to the changes in the accounting policies? A comparative analysis of financial reports of 12 companies (listed and unlisted) for the period from 1996 to 1998 was conducted. The financial reports were examined through information disclosure index, mandatory and voluntary one. Mandatory disclosures were constructed from the Capital Markets Securities Authority (CMSA) and the National Board of Accountants and Auditors (NBAA) disclosure requirements, while voluntary disclosures were constructed from questionnaires administered and interviews of the security dealers and brokers. Issues of concern were the timeliness, type of the audit opinion they received and the changes in the accounting policies. The research found that there were no significant differences with respect to the extent of disclosure, timeliness, the type of audit opinion and changes in the accounting policies made before and after the introduction of the capital markets.

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