BUSINESS REPORTING AND GOVERNMENT INTERVENTION:THE CASE OF LEBANESE TELECOM SECTOR

Abstract

For hundreds of years, the financial has been the only focus of corporate reporting. In recent times, business reporting has increasingly become an important development in the field of corporate disclosure for external stakeholders, which has attracted interest also by institutions and regulators. Accordingly, this work aims to analyze and better understand the underlying reasons of government intervention in business reporting and non-financial performance measurements, using the Lebanese context as case study. In Chapter 1, the thesis looks at the rationales, rules, and actions for public sector intervention in the accounting and business reporting. Then, in Chapter 2 the study carries out an extensive review of relevant academic literature in order to locate and evaluate the findings of the present work within a theoretical framework. In this Chapter, the factors affecting the national accounting, the reporting system and their functioning are described. Government intervention in accounting and business reporting is approached under three different research approaches, i.e. the public interest theory, the institutional theory, and the political economy theory. In Chapter 3, the Lebanese institutional context is described in order to provide an understanding of the national accounting context and the associated regulatory environment. In Chapter 4, the thesis examines more in depth a Lebanese case of business reporting, where the Government has decided to impose mandatory ad hoc non-financial measurements and disclosures on Telecom Companies for control and incentive purposes. The primary research method is based on surveys that have been sent first to the Government (Ministry of Telecommunications), and then to the two private mobile 3 operator companies (MIC1 and MIC2), which are managing the state-owned network through fiduciary management contracts. The research is also carried out using semi-structured interviews to, and email exchanges with, the main institutional and corporate actors. The conceptual framework applied for understanding Key Performance Indicators and their disclosure is rooted on the Concept Paper of WICI (World Intellectual Capital Initiative) Network titled “KPIs in Business Reporting” (www.wici-global.com) as well as on the WICI KPIs for Telecommunication sector. The Chapter investigates how the Lebanese government has addressed the issue of transparency and ensuring financial and non-financial reporting compliance, as well as its preferential reasons for an interventionist approach, which reflects the today’s growing importance of State presence in the field of Business Reporting rather than in the more “traditional” Financial Reporting. In Chapter 5, the research questions are reviewed, and compared and contrasted with the findings of the work. Answers, explanations, and justifications in relation to the literature review are provided. A general assessment of Lebanese government intervention in business reporting is undertaken to evaluate how successful such governmental decision and action have been on improving the performance of the Lebanese telecom sector. The Lebanese is considered to be an interesting case, because it addresses a government’s call for more information on Telecom companies’ “hidden” factors and wealth, which - through selected KPIs - has had the unintended consequence of bringing about and making emerge a new knowledge and pattern of visibility on corporate intangibles in a geographical region where official guidelines on IC Reporting are still absent. There is clearly a great deal of further research work to be done in the Middle East region, if we are to increase our understanding of the ways in which IC reporting can work in these national and organizational settings, while contributing to a better transparency and economic development of that geo-economic area