ANALYSIS OF EFFECTS OF CHANGES IN REGULATORY REQUIREMENTS FOR DISCLOSURES ON THE FINANCIAL AND NON-FINANCIAL REPORTING OF COMPANIES
ANALYSIS OF EFFECTS OF CHANGES IN REGULATORY REQUIREMENTS FOR DISCLOSURES ON THE FINANCIAL AND NON-FINANCIAL REPORTING OF COMPANIES

Author(s): Mirjana Hladika, Eugen Lacković
Subject(s): Economy, Business Economy / Management, Accounting - Business Administration
Published by: Udruženje ekonomista i menadžera Balkana
Keywords: Non-financial reporting;Directive 2014/95/EU;Transparency of business;Corporate social responsibility;
Summary/Abstract: Strong competition in all segments of the economy requires companies to adapt more quickly to market demands and market participants. In such an environment, companies are required to adapt the decision-making and management process. At the same time, stakeholders demand a wider range of information for making business decisions. The public is increasingly loud and emphasizes the awareness and the need for corporate social responsibility, the need for environmental protection and human rights. In order that all stakeholders (investors, creditors, suppliers, current and future employees and others) will have a more complete insight into the operations of a particular company, beside financial reporting, the non-financial reporting is becoming more and more important. Non-financial information enables different stakeholders to see more clearly the impact of a company’s operations on society as a whole, the environment, and the economy within which it operates, apropos to create a clearer picture of how each individual company creates value. Non-financial information, along with financial information, represents a more quality information base for short, medium and long-term business decisions. In order to regulate the non-financial reporting, the European Commission by Directive 2014/95/EU has prescribed the preparation of the non-financial report for certain entities for the reporting periods beginning on 1 January 2017. In that effect, the aim of this paper was to investigate whether the changes in regulatory requirements for the disclosures of financial and non-financial information affected a more transparent and comprehensive presentation of information about the companies’ business. The research was conducted on the basis of the analysis of secondary data sources, primarily published non-financial information on the company’s website and in their annual reports. Research sample consists of five companies from five different EU countries. Published secondary data were analyzed in qualitative and quantitative terms using comparative and compilation methods and methods of analysis and synthesis. The research results showed that non-financial reporting was not standardized, and that the introduction of legal obligation for non-financial reporting did not affect the scope and presentation of non-financial information. The main reason for this research results can be the fact that the observed companies, already before the introduction of this obligation, realized the significance and importance of non-financial reporting.

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