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Visibility and Decommissioning Disclosure Quality in Europe

Conference paper
Authors Mari Paananen
Emmeli Runesson
Niuosha Samani
Olle Dahlén
Published in 41st Annual Congress of the European Accounting Association 2018, Washington DC
Publication year 2018
Published at Department of Business Administration, Accounting
Language en
Keywords Decommissioning provision, discount rate, disclosure quality, computerized textual analysis
Subject categories Business Administration


We investigate the effect of firm visibility on firms’ disclosure quality. Specifically, we examine the effects of media attention on firms’ disclosures about provisions for decommissioning and dismantling costs by European firms reporting under IFRS during the period 2005 to 2014. Using multivariate analysis, we find that firms that are more visible are more forthcoming with information about discount rates and horizons, use more specific language and adopt a more cautious tone (measured using sentiment analysis). Overall, we find that only 44% (45%) of our sample firms disclose discount rates (horizon) used to estimate the provision. We also find a stark difference between Eastern and Western Europe. The disclosure quality using computerized text analysis among Eastern European firms seems to be lower. However, this difference is not confirmed when analyzing disclosure on discount rates and horizons across Eastern and Western European companies as there is virtually no difference across the two groups in this regard. The effect of visibility, meanwhile, is to decrease firms’ disclosures about these items, as well as reduce the use of cautious language.

Page Manager: Webmaster|Last update: 9/11/2012

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