Disclosure analysis in financial reporting: An application for Istanbul Stock Exchange

Financial reporting is very important for users of financial statements because of being an information source of the company. Investors and shareholders obtain more information about company from financial statement disclosures. Laws and regulations of capital markets format financial statement disclosures in accordance with IFRS. Namely, changing world makes disclosure of financial reports as important as financial statements.The main aim of this study is to determine disclosure quality of ISE 100 non-financial firms. Data set covers period from the beginning of 2005 to the end of 2010. Data is analyzed in three stages. In the first stage, an overall analysis is conducted by using content analysis. Number of pages for disclosure of each company is counted and audit quality is measured in terms of audit company size. In the second stage, a deeper content analysis is conducted and percentage distribution of each disclosure item for each financial statement disclosure is analyzed. In the third stage, content analysis is conducted by automated content analysis. N-vivo software program is used for word frequency analysis.At the end of the research, it is found that number of pages of disclosure audited by big four companies is bigger than non-big four companies. ?Valuation Principles and Accounting Policies?, ?Guidelines on Presentation of Financial Statements? and Related Party Disclosures? items are the most disclosed items for 2005 and 2006. Third most disclosed item is ?Provisions, Contingent Liabilities and Contingent Assets? in 2007. ?Guidelines on Presentation of Financial Statements?, ?Levels and Characteristics of Risk Generated from Financial Instruments? and ?Assets and Liabilities Object to Tax? are the most disclosed three items of 2008, 2009 and 2010. The originality of this thesis comes from being the first automated content analysis study in the literature of accounting in Turkey.Keywords: Disclosure Analysis, Disclosure Quality, Content Analysis