The effect of IAS 1 amendments on disclosure quality: Evidence from a Swedish context A study investigating and stickiness in relation to the

Background: In January 2016 the amendments to IAS 1, as proposed by the IASB, became effective, with the intended outcome to increase the disclosure quality. These amendments have been developed in order to adjust for the existing issue of disclosure overload within annual reports, i.e. the amount of boilerplates and stickiness of disclosures. Purpose: This thesis has examined whether these amendments have had the intended outcome, by investigating if the phenomena boilerplate and stickiness have decreased within annual reports for Swedish listed companies. In addition to this, the thesis investigated if firm size, audit firm and industry have any effect on disclosure quality. Additionally, it investigates if larger companies have adopted the new amendments more in line with the intended outcome. Research design: In order to investigate the purpose of this thesis the disclosed information about accounting policies and critical judgements and estimates in annual reports for Swedish listed companies have been analysed, over a time period of four years. Consequently, the phenomena boilerplate and stickiness have been defined by measures, where Computer-Aided Text Analysis (CATA) has been utilised. Results and conclusion: This thesis found that there is a tendency towards the intended outcome, meaning that the companies’ disclosures have become better. Further, it is found that firm size seems to impact the disclosure quality and that bigger companies tend to have adopted the amendments to a larger extent. However, the result for audit firm showed that companies not using one of the Big 4 audit firms tend to have better disclosure quality. Lastly, the result did not show any difference within disclosure quality between manufacturing and non-manufacturing companies. Limitations: The measurements provided in this paper could be argued to require further validation, since boilerplate and stickiness are areas that have not yet been subject to much research. Further, the sample could be argued to be insufficient, explainable by a shortfall due to time consuming manual collecting and testing. Lastly, the division between companies having either the Big 4 or others, as audit firm, could be argued to be inadequate. Suggestions study, get a larger sample. Furthermore, there is a need to further validate the proxies for our variables. Abstract In January 2016 the amendments to IAS 1, as proposed by the IASB, became effective, with the intended outcome to increase the disclosure quality. This study has examined whether these amendments have had the intended outcome, by investigating if the phenomena boilerplate and stickiness have decreased within annual reports for Swedish listed companies. In addition to this, we have investigated if firm size, audit firm and industry have any effect on disclosure quality. We found that there is a tendency towards the intended outcome, meaning that the companies’ disclosures have become better. Further, we found that firm size seems to impact the disclosure quality, which is in line with previous research. We also found that bigger companies tend to have adopted the amendments to a larger extent. However, audit firm showed a result that did not support previous research by indicating that companies not using one of the Big 4 audit firms tend to have had better disclosure quality. Lastly, our result did not show any difference within disclosure quality between manufacturing and non-manufacturing companies.