Risk reporting: A study of risk disclosures in the annual reports of UK companies

Linsley, Philip; Shrives, Philip

doi:10.1016/j.bar.2006.05.002

Cited by 572 publications

(1,021 citation statements)

References 30 publications

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“…Gómez, Iñiguez, and Poveda (2006) also found that financial analysts recommend investing in companies that seem to be more transparent due to their supplying more voluntary information. Moreover, voluntary transparency drives less capital costs (Healy & Palepu, 2001;Leuz & Verrechia, 2000;Linsley & Shrives, 2006) and less stock price spread (Healy & Palepu, 2001) since creditors and investors will perceive the investment as less risky. In contrast, managers' avoidance of litigation risk, in case investors feel misled by actual figures turning up not as good as what was predicted in voluntary reports, can cause managers to refrain from releasing non-required information (Deumes & Knechel, 2008).…”

Section: Literature Review and Research Questionsmentioning

confidence: 99%

“…The lack of proper risk disclosure helped to boost and amplify the current financial crisis (Kothari & Lester, 2012), but this has changed to some extent. This paper builds on the CG literature that explores the impact of good governance mechanisms on the quality of financial information (Carcello & Neal, 2003;Pomeroy & Thornton, 2008;Pucheta-Martinez & Fuentes, 2007;Pucheta-Martinez & GarciaMeca, 2014) and risk disclosure (Cabedo & Tirado, 2004Deumes & Knekel, 2008;Linsley & Shrives, 2006;Oliveira, Rodrigues, & Craig, 2011;Domínguez & Gámez, 2014).…”

Section: Introductionmentioning

confidence: 99%

“…The informative content of these financial reports is a matter of major concern because capital markets are increasingly more demanding, and providing truthful, relevant information becomes crucial for markets' proper functioning, i.e., current and potential investors can properly evaluate their investments based on relevant information about companies' risk profile (Linsley & Shrives, 2006).…”

Section: Introductionmentioning

confidence: 99%

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Risk Disclosure Analysis in the Corporate Governance Annual Report Using Fuzzy-Set Qualitative Comparative Analysis

2016

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This paper explores the necessary and sufficient conditions of good Corporate Governance practices for high risk disclosure by firms in their Corporate Governance Annual Report. Additionally, we explore whether those recipes have changed during the financial crisis. With a sample of 271 Spanish listed companies, we applied fuzzy-set qualitative comparative analysis to a database of financial and non-financial data. We report that Board of Directors independence, size, level of activity and gender diversity, CEO duality, Audit Committee independence, being audited by the Big Four auditing firms and the presence of institutional investors are associated with high risk disclosure. The conditions included in almost every combination are the presence of institutional investors and being audited by the Big Four. We found similar combinations for 2006 and 2012, while the analysis for 2009 showed the lowest number of causal configurations.KEYWORDS | Board composition, corporate governance, fuzzy-set qualitative comparative analysis, independent director, risk disclosure. RESUMO O presente artigo investiga as condições necessárias e suficientes das boas práticas de Governança RAE-Revista de Administração de Empresas | FGV/EAESP

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Section: Literature Review and Research Questionsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Risk Disclosure Analysis in the Corporate Governance Annual Report Using Fuzzy-Set Qualitative Comparative Analysis

2016

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“…As such, voluntary disclosures involve disclosures in excess of the requirements and include accounting and other information that managers of a company deem relevant to the needs of various stakeholder groups (Jensen, 1993). Furthermore, risk disclosure is an example of voluntary disclosure and has become an essential part of corporate disclosure where it will enhance the transparency level of the company as well as the investor's confidence towards them (Linsley & Shrives, 2005, 2006b. Similarly, Yazid and Muda (2006) found that companies with risk disclosure provided better assessments concerning the risks they faced.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

The Determinants of Voluntary Risk Disclosures: The Case of Shariah Compliant Companies in Malaysia

2017

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Risk reporting is essential in notifying investors on how companies manage the risks they engage in. Even though companies nowadays release information through press releases, corporate websites, and other forms of communications, they still have to disclose more information in their annual reports. The objective of this study is to examine the determinants of voluntary risk disclosures of Shariah compliant companies (ShCCs) in Malaysia, focusing on the religiosity factor and the ownership structure. A quantitative analysis using secondary data was employed as a method to assess the annual reports of 116 Shariah compliant companies in Malaysia for the financial years of 2012 and 2013. The findings of this study reveal that the voluntary risk disclosures in ShCCs on average are not more than sixty per cent. This study indicates no relationship between the religiosity of board members and directors' ownership to the level of voluntary risk disclosure. More importantly, this study finds the relationship between the existence of government ownership and voluntary risk disclosure in ShCCs. The study adds value to the current body of knowledge in voluntary risk disclosures and suggests the importance of risk management information in the annual reports of ShCCs as Malaysia grows as a leading country in the Islamic economy.

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“…Gordon et al (2009) suggest that the relationship between ERM and the company's performance is contingent upon more factors specific to the company, including the complexity of its activities (the number of its business segments). Furthermore, numerous previous studies have been conducted on integrated enterprise risk management, especially on risk disclosure (Linsley and Shrives, 2006;Dobler, 2008;ICAEW, 2011), but to the best of our knowledge, no prior study has explored the link between a company's strategic choices and ERM.…”

Section: Introductionmentioning

confidence: 99%

The Relationship between Corporate Strategy and Enterprise Risk Management: Evidence from Canada

Ben‐Amar

Boujenoui²,

Zéghal³

2014

JMS

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In a context of high competition and economic turmoil, companies are faced with a whole array of financial, strategic and operational risks. To better understand and face repercussions on their activities, companies increasingly adopt integrated risk management systems. The objective of this study is to examine the link between the firm's corporate strategic choices and its risk management approach. Specifically, this paper investigates whether the firm's corporate strategy affects its level of risk exposure, the perception of risk consequences as well as its risk management strategy. Based on a sample of 110 non financial firms listed on the Toronto Stock exchange, we find that risk exposure level, perception of risk consequences and risk management strategy vary according to the firm's business sector. Our results show also that a firm's corporate strategy is a key determinant of its risk management approach.

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Risk reporting: A study of risk disclosures in the annual reports of UK companies

Cited by 572 publications

References 30 publications

Risk Disclosure Analysis in the Corporate Governance Annual Report Using Fuzzy-Set Qualitative Comparative Analysis

Risk Disclosure Analysis in the Corporate Governance Annual Report Using Fuzzy-Set Qualitative Comparative Analysis

The Determinants of Voluntary Risk Disclosures: The Case of Shariah Compliant Companies in Malaysia

The Relationship between Corporate Strategy and Enterprise Risk Management: Evidence from Canada

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