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Survey of Research on the Relationship between International

Capital Markets & Financial Reporting by Multinational Companies

Md. Khurshed Alam 529778,Bangladesh

Prof.

Rabindar Kumar Yadav,525520,Nepal

Dr. Dayanand Arora

Syed Ali Abbas Rizvi, 523351,Pakistan

International Accounting & Reporting

Outline
1. International Capital Markets

2. Financial Reporting & Voluntery Disclosures


3. Cost & Benefits of Voluntary Disclosures
4. Survey on Researches

a) Improving Business Reporting


Examples
b) When Voluntery Disclosures Quality Pays off.
5. Conclusions
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International Capital Markets


New Platform for Risk
Diversification of
Internatonal Companies
& Investors.
Hong Kong, Singapore and
New
York
Stock
Exchanges.

Daily
Turnover
Crossed $ 5 trillion.

has

Financial Reporting & Voluntary


Disclosure by Firm
Financial Reporting
Objectives of FR
Type of Investors
Selecting Right Investors Group

Voluntary Disclosures by Firms


Policy for Voluntary Disclosures
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Financial Reporting & Voluntary


Disclosures
Voluntary Disclosures Financial Reporting
Provde the detail description of
business
information
and
management performance of the
company.

Provide
infornation
about
position and performance of the
company for a period of time.

Explicit not required by GAAP or


any rules.

It should be based on GAAP of


a nation

It is not compalsury requirement,


firm used its to get fair image and
manner.

It is coumpalsury to forcast or
release.

Cost & Benefits of Voluntary


Disclosures
Benefits
Liquidity
Reduction in Cost of Capital
Discourage Agency Problem
Others

Costs
Expense for Preparing &
Publishing
Leakage of Competitive Advantage
Loss in Bargaining Power

Undue Litigation
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Survey on Research
As our topic suggests, we have conducted a survey of already
done researches. These researches were made and concluded
the relationship between International Capital Markets and
Financial Reporting by MNCs.
Here we have particularly focused upon Voluntary Disclosure
by Firms under the Financial Reporting Context.
We have selected two research papers for recognition of area
of voluntary disclosure and its behaviors.

Improving Business Reporting


By

Steering Committee Report with 14 members and 7 working


groups (WG)

Areas of Voluntary Disclosures:

Business Data
Analysis of Data
Forward Looking Information
Information Regarding Different Stakeholders
Company Background, etc

Improving Business Reporting


Findings and Recommendations
Voluntarz Disclosures always useful in Communicating with
investors.

Increase the fast pace of change in the business enviroment in future


and helpful for looking-forwards information.
Share the success of management`s view of the company`s critical
success factors.
It helps to recognize the intengible assets of the company

It should cover not only goods new but also disappointments.

Business Data:
Product & Price:

Examples
(Chemical Industry)

Particular Market Share of Sold Chemicals.

Last years Selling and Raw Material Prices Graphically.


Quarterly changes in physical volume of product by
business group and Geographical location of customer in
percentage.

Forward Looking Information:


Product & Price:

Any Expected Downward Pressure on Price

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When Voluntery Disclosure Quality


Pays off (September 22, 2010)
By Florian Eugstert and Alexander F. Wagner through Swiss
Stock Market(SSM) 345 listed (Domestics 279 and foreign 66)
companies where the use Swiss GAAP
The Voluntary Disclosures Quality

It assessed using a scorecard with 35 items with in 9 categories.


1. Impression

2. Background Information
3. Important Non-Financial

4. Trend Analysis
5. Risk Information

6. Value Based Management


(Cont)
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When Voluntery Disclosure Quality


Pays off (September 22, 2010 )
7. Management-Discosion and Analysis of Annual Financial
Statement
8. Goals and Credibility
9. Sustainability

Achievements
Lower cost of capital amd high liquidity of the stock.
Desrease the liquidity risk for investors and be reflected
in the high market value.

There is positive relationship between a firm`s


reputation and its financial performance so the corporate
classified reputation is an intangible assets.
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Conclusion
We have presented two Brief researches to make our audience
understand the importance of voluntary disclosures.
In fact, we have surveyed more research papers some of them
are as follows:

Corporate Financial Reporting, Hudson

Communicating With Right Investors, Palter,08

Global Capital Markets and Economy, Auditors Network


All of them resulted with indirect relation between voluntary
disclosures and Cost of Capital, and direct relation with
Liquidity of Capital Markets.

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Thanks for Attention

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