How do we assess the quality of corporate financial reporting? A methodological issue

The purpose of this study is to show a new way of assessing the quality of corporate financial reporting.We assess the quality of corporate financial reporting in Bangladesh, a country where the family predominates and the business environment is virtually unregulated, with managerial incentives rather than regulatory influence more likely to induce disclosures and to influence other reporting issues.Both quantitative and qualitative measures are taken into consideration to account for various aspects of financial reporting, as a single proxy does not cover multiple aspects.The overall disclosure index (proxy 1) and corporate accruals (proxy 2) are taken as quantitative measures, while external users' perceptions about financial reporting (proxy 3) are taken as a qualitative measure.Lower disclosure index values, higher corporate accruals, and users' negative impressions result from lower quality financial reports.This study provides a new way of measuring the quality of financial reporting and contributes two new proxies (proxy 1 and proxy 3) to the existing literature on assessing the quality of financial reporting.