Assessment of financial and social disclosure level of Ethiopian commercial banks

Abstract

Abstract Disclosures given by corporations are an important tool used as a communication mechanism between insiders and outsiders either investors or regulators who are seeking information for their decision-making. The study’s objective was to assess the level of financial and social disclosure by Ethiopian commercial banks. To achieve the objective 6 years of secondary data was collected from seventeen banks, mainly from the annual reports of banks. To measure the disclosure level of banks unweighted disclosure index measurement approach was used. To evaluate and analyse the level of financial and social disclosure descriptive statistics (such as mean, standard deviations, and independent t-test) were used. The analysis revealed that the average financial disclosure level of Ethiopian commercial banks during the study was 64.1%, whereas social disclosure was 50.8%. During the study period, both financial and social disclosure showed an increasing trend from year to year. However, the increasing trend of financial disclosure level is higher than the social disclosure level. Further, the independent t-test result showed that there is a statistically insignificant difference between the mean value of public and private banks’ disclosure levels. The study concludes that commercial banks in Ethiopia have a moderate level of financial and social disclosure. From the result, it is recommended that Ethiopian commercial banks should disclose more financial and social information to improve their disclosure level.