The Impact Of Non-Financial Disclosure On The Market Value Of Companies Listed In The Palestinian Stock Exchange (An Empirical Study)

Abstract

The aim of this study is to measure the compliance of companies listed on the Palestine Stock Exchange with all non-financial disclosure requirements in accordance with the requirements of the Palestinian disclosure system. Furthermore, this study investigates the impact of the level of compliance with non-financial disclosure requirements on the market value of these companies depending on the sector in the Palestine Stock Exchange to which these companies belong. In order to fulfill the objectives of the study, a descriptive analytical approach was adopted. The theoretical framework was composed utilizing the secondary data sources including books, research articles, and scientific journals related to the investigated issue. The study also used the data obtained from the annual reports of the study sample, which included 42 companies listed on the Palestine Stock Exchange, for the fiscal years from 2011 to 2016. Many tests were implemented in data analysis such as, but not limited to: Sign Tests, Simple Linear Regression and Kruskal Wallis tests in order to test the research hypotheses. All these tests were conducted utilizing the Statistical Program for Social Sciences (SPSS). A multitude of interesting conclusions were drawn, most importantly: The level of non-financial disclosure of companies listed on the Palestine Stock Exchange is relatively high and there is no impact of the extent of companies' compliance to non-financial disclosure in accordance with the requirements of the Palestinian disclosure system on the market value. Furthermore, there is no significant difference in the levels of compliance with the non-financial disclosure requirements for companies belonging to different sectors in the Palestine Stock Exchange. The study provided a number of recommendations, including: the need to educate investors to achieve increased attention to the disclosure of non-financial information when making any investment decision, and increase the interest of companies to non-financial disclosure, and not simply rely on the using of non-financial information contained in previous reports to cover the current year. Furthermore, there is a need to enforce companies to abide to the non-financial disclosure requirements, the study also recommended the need to work on a review of disclosure of non-financial system requirements in the Palestinian legislation in order to re-formulated these requirements, and assemble them in one law or system. Finally, it is necessary to emphasize the need for companies to comply with all items required by the non-financial disclosure system when preparing their annual report.