Hypotheses Development

A key step in disclosure studies of this nature is to develop hypotheses. A hypothesis is a

“tentative answer to a research problem, expressed in the form of a relation between independent and dependent variables” (Nachmias and Nachmias, 1992. p. 61). These authors also highlighted that hypotheses can be derived deductively from theories, directly from observations, intuitively, or using a combination of these approaches. When following a deductive process, the researcher structures hypotheses or expectations based on a general idea or theory and then collects evidence to enable their testing. In the current study the researcher used a deductive approach by structuring hypotheses and collecting evidence to test them. The hypotheses were were derived from close study of related literature (e.g.

Wallace et al., 1994; Wallace and Naser, 1995; Naser et al., 2002; Haniffa and Cooke, 2002; Al-Razeen and Karbhari, 2004; Mirshekary and Saudagaran, 2005; Hassan et al., 2006; and Kribat, 2009; and Omar and Simon, 2011) and so as to reflect the decision-usefulness theory and positivistic approach underpinning the current study. Each hypothesis concentrates on answering research questions regarding disclosure practices in Kuwaiti non-financial listed companies that reflect the role of financial reporting in a conventional decision-usefulness framework. Table 5.8 details all 28 hypotheses formulated and link them to the thesis’s research specific objectives.

Table 5.8: Hypotheses examined in the Study

H1: Company size is positively associated with the extent of aggregate disclosure.

H2: Leverage is positively associated with aggregate disclosure.

H3: Liquidity is positively associated with aggregate disclosure.

H4: Profitability is positively associated with aggregate disclosure.

H5: Years since listing is positively associated with aggregate disclosure.

H6: There is a significant positive association between a company being audited by a “Big 4” firm and the extent of aggregate disclosure.

H7: There is a significant relationship between industry type and aggregate disclosure.

4. To evaluate preparers’

H8: There is no significant difference among group of preparers regarding the perceived importance of particular users of Kuwaiti non-financial listed companies’ annual reports.

H9: There is no significant difference among groups of preparer in terms of the importance that they attach to different sections of Kuwaiti non-financial listed companies’ annual report for financial decision-making.

H10: There is no significant difference among the groups of preparers in terms of the perceived influence of potential interested parties on Kuwaiti non-financial listed companies’ financial disclosure practices.

H11: There is no significant difference among the groups of preparers in terms of theperceived influence of particular specified factors on financial disclosure practices amongst Kuwaiti non-financial listed companies.

H12: There is no significant difference among the perceptions of preparer groups in terms of the quality and quantity of financial disclosure in Kuwaiti non-financial listed companies’ annual reports.

H13: There is no significant difference in perception among the groups of preparers regarding the purpose of Kuwaiti

non-financial listed companies’ annual reports.

H14: There is no significant difference among the groups of preparers in terms of the perceived significance of specific problems influencing disclosures in Kuwaiti non-financial listed companies’ annual reports.

H15: There is no significant difference among the groups of preparers in terms of theperceived significance of problems restricting the use of Kuwaiti non-financial listed companies’ annual reports.

H16: There is no significant difference among the groups of preparers in terms of perceptions about specific factors that might improve the usefulness of Kuwaiti non-financial listed companies’ annual reports.

5. To evaluate perceptions

H17: There is no significant difference among user groups in terms of the perceived purpose of Kuwaiti non-financial listed companies’ annual reports.

H18: There is no significant difference among the user groups in terms of the perceived importance they attach to various sources of financial information.

H19: There is no significant difference among user groups in terms of the importance that they attach to different sections of Kuwaiti non-financial listed companies’ annual reports for decision-making.

H20: There is no significant difference among user groups’ in terms of the perceived importance they attach to the criteria that might affect the quantity and quality of financial information disclosed in Kuwaiti non-financial listed

companies’ annual reports.

H21: There is no significant difference among user groups’ views regarding the understandability of different sections of Kuwaiti non-financial listed companies’ annual reports.

H22: There is no significant difference among user groups, views about the relevance of different sections of Kuwaiti non-financial listed companies’ annual reports.

H23: There is no significant difference among user groups’ views regarding the reliability of different sections of Kuwaiti non-financial listed companies’ annual reports.

H24: There is no significant difference among user groups’ views regarding the comparability of different sections of Kuwaiti non-financial listed companies’ annual reports.

H25: There is no significant difference among user groups regarding the quantity of disclosure in different sections of Kuwaiti non-financial listed companies’ annual reports.

H26: There is no significant difference among user groups in terms of the perceived significance of problems with usage of Kuwaiti non-financial listed companies’ annual reports.

H27: There is no significant difference among user groups’ views about the degree of compliance with IFRSs’ mandatory disclosure requirements by Kuwaiti non-financial listed companies’.

H28: There is no significant difference among the groups of users in terms of perceptions about specific factors that might improve the usefulness of Kuwaiti non-financial listed companies’ annual reports.