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Financial Reporting Quality in Emerging Economies

Empirical Evidence from Brazil and South Africa


Gregor Hagemann

Contrary to their increasingly important role in the global economy, little is known so far about the financial reporting practices in emerging economies. This study therefore analyses the financial reporting practices of listed firms in Brazil and South Africa. It also investigates the determinants of financial reporting quality and its effect on information asymmetries. In addition, the author compares the results for the two emerging economies to those for Germany representing a developed economy. The empirical findings have several implications for researchers and lecturers as well as for practitioners, such as preparers and users of financial reports, legislators, standard setters and auditors.

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4 Theory and hypotheses development


4   Theory and hypotheses development

4.1   Conceptual framework and theoretical foundation

4.1.1   Introduction

Although chapter three has shown that a multitude of studies investigate financial reporting quality, most studies lack a sound theoretical foundation. An explanation may be that

“[…] there is no comprehensive, or unifying, theory of disclosure […]”562.

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