Mandatory Disclosure of Non-financial Information : The effect of introducing regulation on non-financial disclosure - Evidence from Norway

Abstract

This study investigates the effects of the introduction of the Norwegian Accounting Act on Non-Financial Disclosure and the removal of the transition rule. We investigate whether Norwegian firms have increased their disclosure on the mandated topics in terms of key performance indicators, narrative disclosure and the outside-in impact of the environment relative to a control group. Our sample consists of Norwegian firms listed on Oslo Stock Exchange and a matched control group of US firms. We use computer-assisted textual analysis to measure disclosure in firms’ annual- and sustainability reports, and a difference-in-difference model to investigate the treatment effect. We find that Norwegian firms have increased their disclosure on all disclosure measures throughout the sample period, and a significant increase in disclosure on the impact on the external environment and the outside-in impact of the external environment. We conclude that both events have induced Norwegian firms to increase their non-financial disclosure, and had a treatment effect in terms of the above-mentioned disclosure measures.