Textual risk disclosures and investors’ risk perceptions

Kravet, Todd D.; Muslu, Volkan

doi:10.1007/s11142-013-9228-9

Cited by 497 publications

(373 citation statements)

References 48 publications

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“…Such a risk seems to arise in the case of CSR disclosure decisions. The sources of CSR information for independent directors are managers and there is always a risk of receiving manipulative or misleading information from the management (Kravet and Muslu 2013). They also lack in focus knowledge and specialized training about the CSR issue (Cramer and Hirschland 2006).…”

Section: Independent Directors and Csr Disclosurementioning

confidence: 99%

“…The independent directors rely on the manager for the information related to CSR and managers always possess a risk of receiving manipulative or misleading information (Kravet and Muslu 2013;García-Sánchez and Martinez-Ferrero 2018). The CSR information, in which they usually do not have to be experts (Cramer and Hirschland 2006), supposes the risk that any misleading information can damage their reputation and may affect their future job opportunity in other firms (Fama and Jensen 1983;Fama 1980).…”

Section: Introductionmentioning

confidence: 99%

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Board Independence and Corporate Social Responsibility Disclosure: The Mediating Role of the Presence of Family Ownership

Bansal

Pérez

Ariza

2018

Administrative Sciences

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This paper examines the impact of board independence on corporate social responsibility (CSR) disclosure and analyses the moderating effect of the presence of family ownership. Using an international sample from 29 countries from 2006 to 2014, our panel Tobit estimation shows that board independence is negatively associated with CSR disclosure practices and they present opposition to CSR disclosure practices. However, family ownership moderates the relationship and enforces the positive orientation of independent directors towards CSR disclosure. This shows that the presence of family ownership reduces independent director concern of reputation risks associated with receiving misleading information and family firms decrease the asymmetries of information between the independent director and management. The study also finds that independent directors encourage CSR disclosure in family firms more in civil law countries where investor protection is low compared to common law countries where investor protection is high.

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Section: Independent Directors and Csr Disclosurementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Board Independence and Corporate Social Responsibility Disclosure: The Mediating Role of the Presence of Family Ownership

Bansal

Pérez

Ariza

2018

Administrative Sciences

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“…The FASB is currently re-examining certain aspects of hedge accounting, including disclosures (Burkholder, 2014 In addition to studying derivative and hedging disclosure, prior research also 7 Another stream of research studies the effects of risk-related disclosures not specific to derivatives and hedging. These papers find that risk disclosures are useful sources of information and are associated with investor perceptions of firm risk (Kravet and Muslu, 2013;Campbell et al, 2014;Bao and Datta, 2014;Hope et al, 2015;Filzen, 2015).…”

mentioning

confidence: 99%

Improving Financial Statement Footnotes: Evidence from Derivative and Hedging Disclosures

Steffen

2016

SSRN Journal

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I investigate whether changes in derivative and hedging footnote disclosures required by SFAS 161 affect investor and analyst uncertainty. My study is motivated by accounting standard setters' and researchers' interest in disclosure effectiveness, and by prior research linking investors' interpretations of public information to measures of uncertainty. For a broad sample of firms, I use textual analysis to measure changes in the amount and salience of derivative and hedging information caused by SFAS 161. Using a difference-in-differences design to study the effects of these changes, Ifind that investor uncertainty is reduced for firms adopting SFAS 161. In addition, I find that for some uncertainty proxies this reduction is greater for firms whose disclosures were more affected by SFAS 161, consistent with the new disclosures improving investor understanding. I also find evidence of a decreased association between bid-ask spread and movements in risk factors, indicating that SFAS 161 reduced uncertainty stemming from these movements.

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“…Some studies further reported that disclosure decisions are associated with management incentives (Merkley, 2014;Kravet & Muslu, 2013;Davis, Piger, & Sedor, 2012;Price, Doran, Peterson, & Bliss, 2012;Loughran & McDonald, 2011;Henry, 2008;Li, 2006). This study differs from above-mentioned studies in attempting to examine the relationship between the disclosure of MI and CSR companies by examining whether CSR companies are more likely to disclosure the MI, because CSR matters to the market, and assessments of CSR can potentially provide useful and timely information to investors.…”

Section: Literature Reviewmentioning

confidence: 92%

Exploring the Nature of Material Information: Disclosure and Its Implications

Wang¹,

Syu²

2015

IJEF

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Understanding the nature of material information is of crucial importance to regulators and the investment community, particularly with regard to the implications of disclosure. This study examined the disclosure of material information by companies listed in Taiwan in various stages of their life cycle to identify the nature of material information as well as related firm performance and provides insights into their causes and consequences. Evidence suggests that companies intent on fulfilling their corporate social responsibilities are more likely to disclose material information and when doing so, they are highly valued by market participants. Our empirical results provide strong evidence that the disclosure of material information by socially responsible companies is associated with higher earnings quality. Furthermore, mature companies are more likely than growing companies to receive favorable reactions from market participants when they disclose material information.

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Textual risk disclosures and investors’ risk perceptions

Cited by 497 publications

References 48 publications

Board Independence and Corporate Social Responsibility Disclosure: The Mediating Role of the Presence of Family Ownership

Board Independence and Corporate Social Responsibility Disclosure: The Mediating Role of the Presence of Family Ownership

Improving Financial Statement Footnotes: Evidence from Derivative and Hedging Disclosures

Exploring the Nature of Material Information: Disclosure and Its Implications

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