Public Availability of Financial
Statements by Non-listed Companies
Ana Cristina Hirata Barros
Research / Operations Analyst
Europe and Central Asia Region
THE WORLD BANK
Research Questions
Should the World Bank support
the mandatory disclosure of
financial statements for non-listed
companies?
If so, what considerations should
be taken into account when
formulating mandatory disclosure
policies?
Organization
Part I:
Theoretical
Based on literature
review
Arguments for and
against mandatory
disclosure of
financial
statements of
nonlisted
companies.
Part II:
Empirical
Based on survey
data (39 countries)
Legal disclosure
requirements
Enforcement
mechanisms and
compliance rates
Part I
Arguments for and against public disclosure of
financial statements by non-listed firms.
Mandatory vs. voluntary disclosure
Country considerations to be taken into account
when considering a mandatory disclosure policy
for non-listed firms.
Part II
How are financial statements made public (e.g.,
filed in a public registry, published in a
newspaper/ official gazette, etc.)
What information is included in the financial
statements (e.g., explanatory notes, audit
report)
How are requirements enforced (sanctions), what
is capacity of enforcement body, and what are
compliance rates
Part II: Sample
Austria, Belgium, Croatia,
Denmark, Estonia, France,
Germany, Italy, Norway,
Poland, Russia,
Serbia, Turkey, UK
Brazil, Canada, Chile,
Dominican Republic,
Jamaica, Mexico
United States
Egypt, Israel,
Jordan, Tunisia
Kenya, Mauritius,
Nigeria, Senegal
South Africa
China, India
Indonesia, Japan,
Kazakhstan, Korea,
Malaysia, Philippines,
Sri Lanka
Australia,
New Zealand
Initial Findings……
Part I
Arguments in favor of public
disclosure by non-listed firms:
Enhancement of Corporate Governance
Protects third parties and the public (e.g.
creditors, suppliers, employees, etc.)
Improves the allocation of resources
Disclosure acts as a “report card” on
management’s activities.
Part I
Arguments in favor of mandatory
(vs. voluntary) public disclosure by
non-listed firms:
Financial information = public good (would be
under-produced).
Reluctance to disclose unfavorable
information.
Standardization of financial information 
enhanced consistency and comparability
Mandatory disclosure levels the playing field
among businesses.
Part I
Arguments against public
disclosure by non-listed firms:
Costs outweigh the benefits of financial
disclosure
Lack of timeliness of financial statements
Lack of usefulness of information contained in
financial for decision making.
Part I
Policy Considerations
Legal environment and other corporate
governance safeguards
Enforcement capacity
Status quo and interest group entrenchment
Level of debt v. equity financing
Quality of accounting standards and practices,
as well as quality of accounting standard
enforcement mechanisms
Part II
Part II: Initial Survey Responses
Responses Received
Belgium
Brazil
Canada
Chile
China
Egypt
Estonia
Indonesia
Kenya
Korea
Malaysia
Mauritius
N. Zealand
Nigeria
Norway
Philippines
Poland
Senegal
Sri Lanka
Turkey
UK
Pending Responses
Australia
Austria
Croatia
Denmark
Dominican R.
France
Germany
India
Italy
Jamaica
Japan
Kazakhstan
Mexico
Russia
Serbia
South Africa
Tunisia
USA
Part II
Public Disclosure for Non-listed
Companies: Scope of Requirement
3
7
12
1
3
5
Countries with No Disclosure Requirement
All
Size
Countries with Public Disclosure Requirement
Legal Form
Other
*n=19
Part II
Audit Requirements for Non-listed
Companies: Scope of Requirement
6
13
5
7
1
No Audit Required
Audit Required
All
Size
Other
*n=19
Part II
Filing Methods for Non-listed
Companies
10
Number of Countries
9
8
7
6
5
4
3
2
1
0
Paper
Online
Floppy Disk
Method of Filing
Required
Optional
Not accepted
*n=12
Part II
Relevance of Financial Statements:
Required components
14
12
10
8
6
4
2
0
BALANCE
SHEET
INCOME
STATEMENT
STATEMENT OF
CHANGES IN
EQUITY
CASH FLOW
STATEMENT
EXPLANATORY
NOTES
EXTERNAL
AUDITOR
REPORT
MD&A
*n=12
Part II
Timeliness of Financial Statements:
Consolidated and Legal Entity Accounts
Number of Countries
5
4
3
2
1
0
<90
<120
<180
>180
Number of Days from Closing Date
Consolidated
Legal entity
*n=11
Research paper will be available for review in
June/July 2006.
We look forward to presenting our final findings
at that time.
Thank you