Users' perceptions and uses of financial reports of small and medium companies (SMCs) in transitional economies

Abstract

PurposeThe purpose of this paper is to report the findings of an exploratory study examining users' perceptions and uses of SMC financial reports in the transitional economy of Vietnam.Design/methodology/approachSemi‐structured interviews were conducted with a wide range of users of financial information.FindingsThe range of users of financial information was limited, mainly the tax authorities and government agencies. Banks were considered to be another important user, but only by a minority of the companies interviewed. External users were concerned with the reliability of information provided by SMCs. In addition to the main indicators in the financial statements, cash flow information and forecasts were seen as important, but these were normally unavailable or poorly presented.Research limitations/implicationsAs the study focuses on a small sample of users of financial information, the generalisability of the findings is restricted. Appropriately designed quantitative studies could be conducted to verify the findings of this study.Practical implicationsAccounting expertise was seen as the main concern in the directors' use of information. The study also found a low awareness of cost‐benefit considerations amongst the directors of SMCs. Auditing was regarded as infeasible because of the low quality of the audits available and inadequate capacity of auditors to supply the small company market.Originality/valueThe study offers rich data on the users' perceptions and uses of financial information of SMCs. This is the first time this type of research has been conducted in Vietnam.

Users’ Perception of Financial Reporting Quality in Ghana

“…Again, Son, Marriott and Marriott (2006) examined users' perceptions and uses of financial reports among small and medium companies (SMCs) in transitional economies in Vietnam. The study utilised semi-structured interviews among users of financial information.…”

“…Hasan et al (2014) reported that, in Bangladesh users' perception of the qualitative characteristics of disclosures of financial reporting was far below the acceptable level. Again, Son et al (2006) also found that, according to users of accounting information in Vietnam, the financial statements of small and medium scale firms were normally unavailable or poorly presented. Tasios and Bekiaris (2012) found that auditors perceive overall FRQ of Greek companies to be moderate.…”

Information technology implementation: evidence in Spanish SMEs

“…The starting point is an overview of the different definitions of an SME (Maroto, 2008;Milanés, 2007;Ruiz Lamas et al, 2007;Nieto and Fernandez, 2006;Duc Son et al, 2006;Caldeira and Ward, 2003) in terms of size, operating profit/loss, assets of the company and extent of compliance with financial disclosure requirements.…”

Financial reporting by Small and Medium sized Entities in Mongolia and the International Financial Reporting Standard for Small and Medium sized Entities

“…Second, the majority of studies on SME reporting have adopted either a quantitative approach (Aboagye-Otchere & Agbeibor, 2012; Collis & Jarvis, 2000;Dang, 2011;Eierle & Haller, 2009;Fulbier & Gassen, 2010;Holmes, Kent, & Downey, 1991;Mullerova, Pasekova, & Cizevska, 2010;Rennie & Senkow, 2009) or a qualitative research design (Albu, Albu, & Fekete, 2010;Bohusova, 2011;Carsberg et al, 1985;Cordery & Baskerville, 2006;Dang, Marriott, & Marriott, 2006;Devi, 2003;Eierle, 2005;Sian & Roberts, 2006. In contrast, the present study uses a mixed method approach employing both quantitative and qualitative designs.…”

“…Holmes and Nicholls (1989), for instance, with regard to Australia; Floropoulos and Moschidis (2004) for Greece; Maingot and Zeghal (2006) Dang, et al (2006) and Dang (2011) for Vietnam.…”