An Analysis of Disclosure in the Annual Reports of U.K. and Dutch Companies

This study adopts a comparative approach to assess the comprehensive-ness of disclosure in the 1996 annual reports of United Kingdom (U.K.) and Dutch corporations. Although the two countries exhibit some similarities, there are important differences in legal systems, capital markets, and corporate governance mechanisms. The disclosure model developed is based on the main headings specified in the Fourth and Seventh European Union Directives. Based on this model, disclosure by U.K. companies is more comprehensive than by Dutch corporations and the difference is significant (5 percent level with two-tailed test). Most of the key areas of disclosure are found to be more comprehensive in the U.K. than in The Netherlands. This is due to more stringent regulation in the U.K. than in The Netherlands where the approach is more flexible. The model is used to establish whether disclosure is related to a number of firm-specific characteristics using regression analysis. The impact of size is the same for both countries, but other firm-specific characteristics have different effects.