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Exploring the aggregate, mandatory and voluntary financial disclosure behaviour under a new regulatory environment : the case of Jordan

Omar, Belal Fayez Abdallah


Belal Fayez Abdallah Omar


Jon Simon


The scope of the study is to investigate the disclosure behaviour in Jordan after important changes in the economic and accounting regulations. The Securities Law No. 23 in 1997 was a significant turning point for the Jordanian Capital Market (JCM). The Law restructured JCM and imposed new regulations to achieve the transparency in the market in line with international standards. Thus, this study aims to expand our understanding about the financial disclosure for Jordanian companies, since the introduction of this Law. In particular, the major objectives of the study are:
1) To evaluate the extent of aggregate, mandatory and voluntary disclosure practices for Jordanian companies listed in Amman Stock Exchange (ASE).
2- To examine the relationship between the aggregate disclosure (mandatory and voluntary) and a number of company characteristics (financial and non-financial) for Jordanian companies listed in ASE.
3- To investigate whether or not Jordanian corporations in ASE comply with mandatory disclosure requirements when they prepare their annual reports.
4- To develop a disclosure framework by undertaking interviews with related parties (i.e. regulators, auditors and financial analysts) in order to enhance our understanding about the disclosure issue in Jordan and to understand and explain the findings of the quantitative approach which was applied to meet the first three objectives of the study.

A sequential explanatory triangulation design was adopted, incorporating both quantitative and qualitative data collection and analysis. Quantitative data collection and analysis was used to achieve the first three objectives of the study. For the purpose of the first and second objectives, an aggregate comprehensive disclosure index of 331 items was constructed (278 mandatory items and 53 voluntary items). In addition, 17 hypotheses were formulated in order to examine the relationship between the extent of aggregate disclosure (dependent variable) and the company's characteristics (independent variables): firm size, leverage, profitability, number of shareholders, listing status, industry type, assets-in-place, ownership structure, liquidity, audit firm size, and listing age. A sample of 121 companies (55 services and 66 industries) for the year 2003 was selected to fulfil the first and second objectives of the study.

As regards the third objective, an index of mandatory items (278 items) was employed in order to measure compliance with the new disclosure requirements. A matched sample of 60 companies was selected for two years, 1996 and 2003 (before and after the new regulations).

Qualitative data were collected by means of semi-structured interviews to address the fourth objective. The resulting data was analysed using general analytical procedures.

The results of the study revealed that there was a significant increase in the level of aggregate disclosure (its average was 69%) compared to previous studies in Jordan. The extent of mandatory and voluntary disclosures was 83% and 34% respectively. Disclosure level was high in financial statements of Jordanian companies (e. g. balance sheet and income statement) and general information in the annual reports, but low in the voluntary item groups such as market based and financial history information.

Univariate analysis revealed that firm size, profitability, number of shareholders, listing status, industry type, audit firm size and listing age are significant variables in explaining the variation in the level of aggregate disclosure among Jordanian companies. Multivariate analysis showed these variables to be significantly associated with the level of aggregate disclosure: firm size (sales), profitability (ROE), audit firm size, industry type and listing status.

The study also found that there was a significant increase in the level of aggregate and mandatory disclosure for Jordanian companies in 2003 compared with 1996. However, the level of voluntary disclosure did not differ significantly in the two periods.

Qualitative analysis was used to develop a framework which includes four main factors related to the disclosure issue: extent of disclosure, content of disclosure, relationship between disclosure and some variables and the regulations and role of regulators.

This study makes the following contribution to the knowledge:
1- It investigates the scope of aggregate disclosure (mandatory and voluntary) in Jordan after the new regulations. As far as the researcher is aware, the previous studies in Jordan focused either on voluntary disclosure (i. e. Suwaidan, 1997) or part of mandatory disclosure (i. e. Al-Shiab, 2003).
2-The disclosure index used in this study is one of the largest indices used in disclosure studies, since it contains 331 mandatory and voluntary items. This index can be utilized by different users (e.g. investors, financial analysts) to assess the extent of disclosure by companies.
3- Exploring the disclosure behaviour in Jordan using a triangulation design (sequential explanatory design) implies a new approach to understand the issue of disclosure in developing and developed countries. Using both quantitative and qualitative methods provides a fuller and more comprehensive picture about disclosure issues.

Finally, the study discusses implications of the increased regulatory environment, recommendations for improving disclosure in Jordan and suggests areas for future research.


Omar, B. F. A. (2007). Exploring the aggregate, mandatory and voluntary financial disclosure behaviour under a new regulatory environment : the case of Jordan. (Thesis). University of Hull. Retrieved from

Thesis Type Thesis
Deposit Date Oct 2, 2012
Publicly Available Date Feb 22, 2023
Keywords Business
Public URL
Additional Information Business School, The University of Hull
Award Date May 1, 2007


Thesis (44.4 Mb)

Copyright Statement
© 2007 Omar, Belal Fayez Abdallah. All rights reserved. No part of this publication may be reproduced without the written permission of the copyright holder.

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