THE IMPACT OF A DEBT MIX CHANGES ON QUALITY OF FINANCIAL REPORTING OF PUBLIC HOLDINGS - POLISH EVIDENCE

The paper studies change of the financial reporting practices of companies and holdings quoted on Warsaw Stock Exchange over the period between 2006 and 2017 with regard to quality of information that is supposed to bring sufficient evidence to all stakeholders (not only shareholders) on a going concern assumption. Context of research has been created by a noticeable change of a debt mix among biggest companies in Polish economy over last decade resulting in a growth of bond debt in total composition of debt instruments. Author provides the qualitative analysis of information disclosures and focuses on verification whether financial disclosures provided in financial reports based on IFRS have evolved and improved over last decade. Growing scale of funding by bonds is a new situation for transition economies where majority of financing comes traditionally from banks. In many cases banks use their privileged situation to neutralize the asymmetry of information and are able to make areal impact on companies' operating and strategic decisions, which creates the regulating role of banking system in the economy. Observed trend of replacing bank debt with bonds, mostly publicly traded, switches off the regulating role of debt providers. The question is: do borrowers provide sufficient information not only to allow overall understanding and forecasting the future company's cash flows (which is the inherent element of the theoretically declared purpose of financial reporting), but what is even more crucial, do financial disclosures allow understanding if these cash flows will be sufficient to service the upcoming financing payments - the very basic driver of financial liquidity and consequently company's or entire holding's going concern?