Perceptions on the usefulness of published financial information to the Egyptian capital market
The main objective of this study is to investigate empirically users' perceptions of the usefulness of financial information that could be provided in corporate annual reports presented by listed companies in Egypt. This investigation is carried out, in the light of the requirements of the Egyptian Accounting Standards (EASs) issued in 1997, the new listing rules of the Cairo and Alexandria Stock Exchange (CASE) adopted in 2000 and the Capital Market Law (CML) No. 95/1992, using a set of eleven qualitative characteristics of accounting information (QCOAI) in a hierarchy, which should be possessed by financial information if it is to be useful to its users. Those characteristics are: understandability, relevance, reliability, comparability, predictive value, timeliness, faithful representation, neutrality, verifiability, consistency and materiality. A survey was carried out, based on a questionnaire, which was designed and pre-tested in two stages, as a basic data collection instrument supported by some semi-structured personal interviews. 320 questionnaires were personally distributed, and a total of 232 questionnaires were collected. Of them 222 were usable and analysable, representing about 69.38%. The survey was conducted to examine the perceptions of five groups of users of corporate annual reports, namely, financial analysts, decision makers, academics, stock brokers, and staff of the regulatory and observatory bodies, regarding the importance they attach to corporate annual reports and different sources of financial information, sections of corporate annual reports, each of the QCOAI selected earlier in the study, and some financial information items. The collected data were largely quantifiable and based on a five-point scale. The Statistical Package for Social Sciences — SPSS was used in analysing the collected data and the analysis was carried out for the overall sample and for the various sub-groups using the descriptive statistics and the statistical analysis (the non-parametric tests such as the Chi-square Test, the Kruskal-Wallis H Test and the Mann-Whitney U Test). A major finding is that "corporate annual reports" were perceived as the most important source of financial information by users in Egypt, followed by "newspapers and magazines" and "the direct contact with the company management". Also, there was a clear finding that "income statement" was considered as the most important section among the various sections of corporate annual reports followed by "balance sheet" and "cash flow statement". It was found that users as a whole, and as occupation, education and experience groups, considered the selected set of QCOAI to be suitable for use in the evaluation of the usefulness of financial information provided in corporate annual reports. All selected characteristics were perceived to be important or very important characteristics, to slightly different degrees. Furthermore, the study found that "timeliness" was considered as the most important characteristic. Lastly, the majority of financial information items that were perceived as the most important items, whether or not mandatorily required, are not disclosed by listed companies.