INSIGHTS INTO VOLUNTARY DISCLOSURE OF CASH FLOWS INFORMATION IN CROATIA

Since the mandatory application of International Accounting Standard 7 - Cash Flow Statements for the companies that prepare financial statements in conformity with IFRSs in 1994, the statement of cash flows became a very important source of accounting information. However, the presentation of this statement as an integral part of primary financial statements in Croatia is still primarily in the function of legal requirements satisfaction. The study focuses on the voluntary disclosure of cash flows information in the annual reports of Croatian companies whose shares are listed on the Zagreb Stock Exchange. The research is conducted on a sample of 114 companies with the aim to identify characteristics of companies that provide extensive disclosures on cash flows. Logistic regression method is used to explain the relationship between dependent binary variable of voluntary cash flow information disclosure and two groups of independent variables: accounting data (e.g. size, income, operating cash flow, payment of dividends, method used for operating cash flow reporting) and capital market information (e.g. segment of market listed, news announcement and stock market listing duration). Findings indicate that company size as well as stock market listing duration (in years) significantly and positively affect the voluntary disclosure of cash flow information in the annual report of Croatian companies. All remain variables tested are not found to be statistically significantly related to the cash flows information voluntary disclosure level. It can be concluded that despite the desire of the regulatory authorities that capital market investors receive all relevant information, voluntarily cash flow disclosure is not apparent in Croatia and companies voluntarily disclose additional information about cash flows very rarely.