Exploring Capital Structure : Variations in IAS 1 Disclosures of Firm Capital

This study examines how a set of Canadian and German firms apply the quantitative capital disclosure requirements contained in IAS 1. We find significant inter-country differences in both the propensity to disclose a capital structure and in the form of the disclosure. Further, we find variation both within and between countries in the balance sheet elements used to construct the numerators and denominators of the capital structures. When we compare the ratios constructed from the various combinations of balance sheet elements, we find significant measurement differences, in some cases exceeding 10 percentage points. We also find significant measurement differences when we compare capital structure ratios using book values and market values. Overall, our results suggest that the significant variation in capital structure disclosures and measurements we identify are potentially value relevant information for users. These results also have important implications for future research