An International Investigation of the Association Between Societal Variables and Amount of Disclosure on Information Technology Problems: The Case of Y2K

The purpose of this study was to determine possible future disclosure practices related to information technology (IT) problems and the factors affecting such practices within an international accounting context. Disclosure practices related to Y2K disclosure practices was used as the central frame of reference for this study. Based on the survey of 1997/1998 fiscal-year annual reports from 1618 publicly listed firms from seventeen nations this study concluded Y2K disclosure practices varied significantly across national boundaries. It is a prediction of this study that disclosure practices on IT problems in the near to medium future will continue to vary significantly between nations. Empirical findings indicated the five societal variables (political and civil system; cultural values; type of legal system; level of economic development; and equity market) included in this study were significant determinants of the variation in the mean amount of Y2K information reported across national boundaries. Firm size, industry type and materiality of the national cost of Y2K were also associated with Y2K disclosure practices. A firm’s economic performance was not of significance. For international and national policymakers findings from this study imply a possible need to develop strategies to encourage increased disclosure on IT problems that will enable greater consistency and comparability. Finally, results from this study suggest future investigation of disclosure practices related to IT problems should drawn on socially based theoretical frameworks (such as legitimacy theory) rather than those with financial foundations.