The quality of information disclosed in corporate annual reports has received a great deal of attention in the last four decades, mostly in developed countries. The relationship between the extent/quality of disclosure in corporate annual reports and the characteristics of the firm has been extensively examined in the literature. Most of the studies in this area have used an index methodology, which is based on developing a general index and relating it to a number of explanatory variables (e.g., asset size, number of shareholders, profitability, listing status) in order to explain cross-sectional variation in the extent of disclosure in such corporate annual reports.
It is essential to have high-quality standards and reporting practices to provide users of financial information with what they need (Biobele et. al., 2013). Deficiencies in such standards and practices cause inconsistency, incomparability, reduced transparency and a lack of trust in the information provided, which lead to higher costs of capital and increased risks for different user-groups. As Jenkins (2002, p. 2) stated, ‘High-quality financial reporting is essential to maintaining an efficient capital market system. A highly liquid capital market requires the availability of transparent and complete information so that all participants can make informed decisions as they allocate their capital among competing
alternatives’. The above-mentioned perceived benefits accrue to economically advanced nations. However, financial
reporting is even more essential for developing countries which seek to build a strong economy by
regulating financial practices, protecting the national economy from the control of a handful of influential
investors, and encouraging citizens to invest locally. The purpose of this study is to examine the
relationship between the extent of disclosure in corporate annual reports and selected firms’
characteristics in The United Arab Emirates (UAE). UAE, which was established in 1971, is a new
country that relies heavily on oil as its main source of income. Since its establishment, the UAE has
adopted an open economic strategy, and it is one of the fastest growing countries in the world on various
socioeconomic indicators, such as GDP per capita (Wikipedia, 2008). The country has witnessed
remarkable progress and development in different economic aspects. However, the accounting profession
is not well developed (Khasharmeh & Aljifri, 2010).
The government of the UAE has, since 1980, examined the potential benefits of establishing an official
securities market. The market was established in 2000. Different groups of participants in the UAE
securities market (investors, brokers, financial analysts and businessmen) have expressed dissatisfaction
with the practice of financial disclosure among UAE firms, and have complained about variations in
disclosure. The research problem is, therefore, related to corporate disclosure practices in corporate
annual reports. This study seeks to examine the corporate disclosure in annual reports of a sample of UAE
firms and to determine the factors responsible for the variation, if any, in financial disclosure.

From “The Association Between Firm Characteristics and Corporate Financial Disclosures: Evidence From UAE Companies” by Khaled Aljifri, Abdulkareem Alzarouni and Chew Ng