The effectiveness and consistency of disclosures in the notes to financial statements: an analysis of the standards setters efforts

The undoubted effects of fi nancial reporting disclosure on the efficiency of capital markets, as the empirical studies have underlined (Healy, Palepu, 2001; Verrecchia, 2001) in the last two decades, have created great interest on this topic. Despite the relevance for users of the explanatory information to the financial statement (Kolev, 2009), the significant increase in the information provided in financial reporting have contributed to increase the complexity and subjectivity of disclosure. This paper focuses on the analysis of the two projects on fi nancial reporting disclosure, the “Proposed Statement of fi nancial Accounting Concepts” of the Financial Accounting Standard Board an exposure draft published in 2014 and the “Thinking about disclosure in a broader context” of the Financial Reporting Council published in the 2012. From an interpretative and critical perspective of qualitative analysis, we examine the main characteristics of the two kinds of disclosure and compare them in order to verify how they fit in with the need to rationalize and simplify the current disclosure regime and how much the FRC proposal infl uences the FASB project. The analysis is supported by an examination of the literature on the disclosure with the aim of highlighting how the two projects respond to the issues arising from studies on disclosure and in which way the standard setters could improve the disclosure notes of financial statement.