The information content of mandatory risk factor disclosures in corporate filings

Campbell, John L.; Chen, Hsinchun; Dhaliwal, Dan S.; Lu, Hsin-Min; Steele, Logan B.

doi:10.1007/s11142-013-9258-3

Cited by 679 publications

(456 citation statements)

References 47 publications

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“…Deumes (2008) analyzed the content of risk section prospectuses and found that the measure of risk successfully predicts the volatility of a company's future stock price. Campbell et al (2012) found that managers provide risk factor disclosures that meaningfully reflect the risks they face, and the information conveyed by risk factor disclosures is reflected in changes in investor risk assessments. Campbell et al (2012) found that managers provide risk factor disclosures that meaningfully reflect the risks they face, and the information conveyed by risk factor disclosures is reflected in changes in investor risk assessments.…”

Section: Institutional Backgroundmentioning

confidence: 99%

“…Kravet and Muslu (2013) also counted the sentences including at least one risk-related keyword in the 10-K filings. Campbell et al (2012) counted the number of words and keywords in the "Risk Factor" section in the 10-K.…”

Section: Business Risk Disclosurementioning

confidence: 99%

“…While some studies overcome the first problem by developing their own unique word list for corporate filings (Loughran and McDonald 2011;Campbell et al 2012), the other problem remains unsolved. First, there is no readily available dictionary for the setting of corporate filings.…”

Section: Business Risk Disclosurementioning

confidence: 99%

“…The modification score is positively associated with stock price responses to the 10-K filings. Campbell et al (2012) found that managers provide risk factor disclosures that meaningfully reflect the risks they face, and that information conveyed by risk factor disclosures is reflected in changes in investor risk assessments. Li (2010a) showed that the average tone of forward looking statements is positively associated with future earnings.…”

Section: Introductionmentioning

confidence: 99%

“…Firms with high risk disclosure carry greater business risks (Campbell et al 2012;Kim and Fukukawa 2013), and the market discounts their associated revision number because of the higher risk level. Firms with high risk disclosure carry greater business risks (Campbell et al 2012;Kim and Fukukawa 2013), and the market discounts their associated revision number because of the higher risk level.…”

Section: Introductionmentioning

confidence: 99%

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International Perspectives on Accounting and Corporate Behavior

Ito¹,

Nakano²

2014

Advances in Japanese Business and Economics

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Section: Institutional Backgroundmentioning

confidence: 99%

Section: Business Risk Disclosurementioning

confidence: 99%

Section: Business Risk Disclosurementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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International Perspectives on Accounting and Corporate Behavior

Ito¹,

Nakano²

2014

Advances in Japanese Business and Economics

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Do investors value companies' mandatory nonfinancial risk disclosure? An empirical analysis of the Italian context after the EU Directive

2020

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In October 2014, the European Union adopted Directive 2014/95/EU (hereafter, EU Directive), mandating companies of a certain size to draft and publish corporate nonfinancial information (NFI) regarding society and the environment. In this study, we examine the mandatory disclosure of nonfinancial (NF) risks by listed Italian companies, as required by the EU Directive, focusing on both the state‐of‐the‐art of such disclosure and its usefulness for investors. For this purpose, the study adopts a two‐staged research approach; in the first stage, we employed a manual meaning‐oriented content analysis to investigate the NF declarations (NFDs) of the listed Italian companies that were obliged to disclose NFI, returning a quality NF risks disclosure index. In the second stage, we used the value relevance methodology to investigate whether the disclosed NF risk information affects the levels of equity prices, through a modified Ohlson model. Our research is one of the first to investigate the value relevance of mandatory disclosures of NF risks following the implementation of the EU Directive, in the Italian context. The research was carried out in 2017, the first year of the directive's application for listed Italian companies. The main findings support a positive association between NF risk information disclosure levels and companies' market value. Moreover, they provide evidence of a significant mediating effect of NF risk on the relationship between financial risks and market value.

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Are bank risk disclosures informative? Evidence from debt markets

et al. 2020

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This study examines whether financial reporting with a specific focus on risk disclosures have a predictive (informative) effect on banks' credit ratings (BCRs) and, consequently, ascertains whether governance structures can moderate such an association. Using one of the largest bank‐level datasets collected from 12 Middle East and North African (MENA) countries over the 2006–2013 period to‐date, our findings are as follows. First, we find that risk disclosures have a predictive effect on BCRs. Second, we find that the relationship between risk disclosures and BCRs is contingent on the quality of governance structures. Specifically, we find that the informativeness of risk disclosures on BCRs is higher in banks with larger board size, greater independence, higher government ownership, and better Shariah supervisory board, but lower in banks with greater block ownership, higher foreign ownership and the presence of CEO duality. The central tenor of our findings remains unchanged after controlling for a number of firm‐ and country‐level factors, alternative risk disclosure measures, firm‐ and national‐level governance proxies, different types of banks, and potential endogeneities. The findings have important implications for investors, especially bondholders, standard‐setters, regulators, and central governments.

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The information content of mandatory risk factor disclosures in corporate filings

Cited by 679 publications

References 47 publications

International Perspectives on Accounting and Corporate Behavior

International Perspectives on Accounting and Corporate Behavior

Do investors value companies' mandatory nonfinancial risk disclosure? An empirical analysis of the Italian context after the EU Directive

Are bank risk disclosures informative? Evidence from debt markets

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