scholarly journals Risk Disclosure and Firm Value: Evidence from the United Kingdom

2021 ◽  
Vol 8 (55) ◽  
pp. 15-24
Author(s):  
Tache Marta
Keyword(s):  
United Kingdom ◽  
Financial Reporting ◽  
Firm Value ◽  
Quantitative Information ◽  
Financial Instruments ◽  
Risk Disclosure ◽  
Listed Firms ◽  
Ifrs 7 ◽  
Using Data ◽  
Risk Disclosures

Abstract The International Accounting Standard Board (IASB) aimed to increase the decision usefulness of firms’ risk disclosures with the 2007 introduction of the International Financial Reporting Standards (IFRS) 7. Specifically, listed firms were mandated to provide information to the market on both their (1) exposure and (2) risk management, which are associated with holding their financial instruments. This study investigates whether IFRS 7 financial instruments and their disclosures are associated with firm valuation. Using data on premiumlisted United Kingdom (UK) companies, for the period 2007–2019, I find evidence that firm value (proxied by Tobin's Q) is negatively associated with the quantity of IFRS 7 interest and credit risk disclosures. I further find that the market value decreases with the presence of quantitative information tabulated in the disclosures. The findings of this study have important implications for the IASB's standard-setting process.

scholarly journals Do Political Connections Affect the Conservative Financial Reporting of Family Firms?

2019 ◽  
Vol 11 (20) ◽  
pp. 5563
Author(s):  
Hsin-Yi Chi ◽  
Tzu-Ching Weng ◽  
Guang-Zheng Chen ◽  
Shu-Ping Chen
Keyword(s):  
Financial Reporting ◽  
Family Firms ◽  
Political Connections ◽  
Policy Makers ◽  
Listed Firms ◽  
Reporting Incentives ◽  
Final Sample ◽  
The Family ◽  
Governance Practice ◽  
Using Data

This paper investigates the effect of political connections on the association between family firms and conservative financial reporting. While family firms have incentives to reduce agency and litigation-related costs by means of conservative reporting, firms with political connections tend to have opaque financial reporting, which enable them to engage in rent-seeking activities. Using data for Taiwanese listed firms between 1996 and 2012, the final sample observations were 13,877 firm-year observations from a population of 21,393 firm-year observations. We found that political connections weaken the positive relationship between family ownership and conservative financial reporting. This suggests that politically connected family firms make fewer demands for conservative financial reporting. This study contributes to the literature on how political connections affect the family owners’ reporting incentives. Policy makers may consider political connections as an essential factor with respect to establishing governance practice in family firms.

scholarly journals Investigating risk disclosures in Italian integrated reports

2020 ◽  
Vol 28 (6) ◽  
pp. 1149-1178 ◽  
Author(s):  
James Guthrie ◽  
Francesca Manes Rossi ◽  
Rebecca Levy Orelli ◽  
Giuseppe Nicolò
Keyword(s):  
Content Analysis ◽  
Financial Reporting ◽  
Design Methodology ◽  
Alternative Form ◽  
Risk Disclosure ◽  
Integrated Reporting ◽  
Content Type ◽  
Risk Disclosures ◽  
Do So

Purpose The paper identifies the types of risks disclosed by Italian organisations using integrated reporting (IR). This paper aims to understand the level and features of risk disclosure with the adoption of IR. Design/methodology/approach The authors use risk classifications already provided in the literature to develop a content analysis of Italian organisations’ integrated reports published. Findings The content analysis reveals that most of the Italian organisations incorporate many types of risk disclosure into their integrated reports. Organisations use this alternative form of reporting to communicate risk differently from how they disclose risks in traditional annual financial reporting. That is, the study finds that the organisations use their integrated reports to disclose a broader group of risks, related to the environment and society, and do so using narrative and visual representation. Originality/value The paper contributes to a narrow stream of research investigating risk disclosure provided through IR, contributing to the understanding of the role of IR in representing an organisational risk.

Do Risk Disclosures Relating to the Use of Financial Instruments Matter? Evidence from the Australian Metals and Mining Sector

2019 ◽  
Vol 54 (04) ◽  
pp. 1950017
Author(s):  
Kevin Huu Phat Thai ◽  
Jacqueline Birt
Keyword(s):  
Value Relevance ◽  
Individual Risk ◽  
Risk Category ◽  
Financial Instruments ◽  
Risk Disclosure ◽  
Mining Sector ◽  
Regulatory Changes ◽  
Related Risk ◽  
Risk Disclosures ◽  
Risk Reporting

This paper investigates the value relevance of risk disclosures relating to the use of financial instruments in the Australian metals and mining sector. The metals and mining sector is the largest sector in Australia by the number of companies and includes several of the world’s largest diversified resource producers. Using a manually constructed disclosure index based on AASB 7 Financial Instruments: Disclosures, we find that financial instrument-related risk disclosures provide useful information to equity investors. In terms of individual risk category, liquidity risk is shown to be the most informative risk disclosure. We contribute to a stream of the literature examining the informativeness of risk disclosures. The results of this study have implications for several stakeholders regarding the quality assessment of risk reporting. In addition, the findings are of interest to standard setters since further regulatory changes are under consideration to improve the presentation and disclosure of financial instruments.

Corporate disclosure and foreign share ownership: empirical evidence from African countries

2015 ◽  
Vol 57 (5) ◽  
pp. 417-444
Author(s):  
Godfred A. Bokpin ◽  
Zangina Isshaq ◽  
Eunice Stella Nyarko
Keyword(s):  
Financial Reporting ◽  
Corporate Disclosure ◽  
Statistical Relation ◽  
African Countries ◽  
Content Type ◽  
Listed Firms ◽  
Share Ownership ◽  
Using Data ◽  
The Impact ◽  
Corporate Disclosures

Purpose – The study aims to seeks to ascertain the impact of corporate disclosure on foreign equity ownership. Corporate disclosures are important to for stock markets because it is an activity that mitigates information differences between company insiders and outsiders. Design/methodology/approach – Corporate disclosures assume an even greater important when company outsiders are not domiciled in the same country as the company and the company insiders. In this study, the relation between foreign share ownership and corporate disclosures using data on Ghana, Kenya and Nigeria is examined. Findings – The consistent results in this study are that foreign share ownership is positively related to firm size. A negative relation, however, between foreign share ownership and corporate disclosure is found, but this turns out to be related to disclosures about ownership, while disclosures on financial reporting and board management have a positive and insignificant statistical relation taking into account unobserved country, time and firm effects. Further analysis shows that corporate disclosures are very persistent and negatively related to lag foreign share ownership. No consistent statistical relation is found between disclosure and market-to-book values as a proxy for investment opportunities. It is recommended to African-listed firms to pursue adoption of high-quality financial reporting standards and to increase their reporting on board management. The study also recommends that the African Government weighs the benefits of detailed ownership disclosures. Originality/value – The study utilises frontier market data to complement existing literature on how corporate disclosure and transparency influences foreign investors decision to invest in Africa.

Does the corruption perception level of a country affect listed firms’ IFRS 7 risk disclosure compliance?

2017 ◽  
Vol 17 (4) ◽  
pp. 727-747 ◽  
Author(s):  
Ben Kwame Agyei-Mensah
Keyword(s):  
Corporate Governance ◽  
Sub Saharan Africa ◽  
Risk Disclosure ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Content Type ◽  
Listed Firms ◽  
Ifrs 7 ◽  
Sub Saharan ◽  
The Impact

Purpose This paper aims to examine the relationship between corporate governance, corruption and compliance with International Financial Reporting Standard (IFRS 7) risk disclosure requirements in listed firms in two Sub-Saharan Africa countries: Botswana and Ghana. This study tries to test whether the transparency level of a country has any impact on the transparency level of its firms. Design/methodology/approach The study uses 174 firm-year observations between the period 2013-2015 for listed firms in the two countries. Each annual report was individually examined and coded to obtain the disclosure of corporate risk disclosure index. Descriptive analysis was performed to provide the background statistics of the variables examined. This was followed by regression analysis, which forms the main data analysis. Findings The results suggest that the extent of risk disclosure compliance over the three-year period is, on average, 63 and 53 per cent for Botswana and Ghana, respectively. The differences in the disclosure levels in the two countries can be attributed to the different levels of corruption in the two countries. One way of hiding corrupt practices is for companies to disclose scanty information. Originality/value This is one of the few studies in Sub-Saharan Africa that tests the transparency levels of listed firms in the two countries by considering the impact of corporate governance factors on IFRS 7 risk disclosure compliance. The findings of this study will help market regulators in Ghana, Botswana, the Sub-Saharan Africa Security and Exchange Commission (SEC) and the Sub-Saharan Africa exchanges in evaluating the adequacy of the current disclosure regulations in their countries.

scholarly journals Do Corporate Environmental Sustainability Practices Influence Firm Value? The Role of Independent Directors: Evidence from Saudi Arabia

2020 ◽  
Vol 12 (22) ◽  
pp. 9768
Author(s):  
Mohammed Abdullah Ammer ◽  
Meqbel Mishary Aliedan ◽  
Mansour Abdullah Alyahya
Keyword(s):  
Environmental Sustainability ◽  
Firm Value ◽  
Independent Directors ◽  
Environmental Reporting ◽  
Environmental Practices ◽  
Listed Firms ◽  
Board Directors ◽  
Sustainability Practices ◽  
Using Data ◽  
Corporate Environmental Sustainability

Environmental sustainability has become a significant approach for firms to enhance their competitive advantage and reputation. This study examines the association between environmental sustainability disclosures and firm value, in addition to the moderating impact of independent board directors on this association. Using data from Saudi listed firms, we find that reporting environmental sustainability practices has a positive and significant impact on firm value, suggesting that enhanced responsibility and transparency in addition to improved stakeholder trust are important in promoting firm value. We also find that the influence of the reported environmental sustainability practices on firm value is strongly and positively moderated by the presence of independent directors on firms’ boards, signifying that stakeholders relate environmental reporting by firms to more independent directors providing better accountability to environmental practices. The implications of this study will be of great importance for policymakers, firm management, academia, and investors in considering the adoption and importance of firms’ environmental practices.

scholarly journals Firm’s size, mandatory adoption of IFRS and corporate risk disclosure among listed non-financial firms in Saudi Arabia

2021 ◽  
Vol 17 (2) ◽  
pp. 1-28
Author(s):  
Awatif Alsheikh ◽  
Mohamat Sabri Hassan ◽  
Norman Mohd-Saleh ◽  
Mohd Hafizuddin-Syah bin Abdullah ◽  
Warda Alsheikh
Keyword(s):  
Saudi Arabia ◽  
Financial Reporting ◽  
Small Firms ◽  
Ordinary Least Squares ◽  
Risk Disclosure ◽  
Financial Firms ◽  
Mandatory Adoption ◽  
Risk Disclosures ◽  
Corporate Risk ◽  
The Relationship

This study examines the relationship between the mandatory adoption of International Financial Reporting Standards (IFRS) and the disclosures of corporate risk among non-financial firms in Saudi Arabia. Based on the observation of 320 firm-year from 2015 until 2017, this study reveals a positive relationship between the mandatory adoption of IFRS and the corporate risk disclosures. The relationship holds when we decompose corporate risk disclosures into financial and non-financial risk disclosures. The results are consistent for both the pooled Ordinary Least Squares (OLS) and random effects estimations. Additionally, the result is steady with all primary categories except risk management. We also provide evidence that large firms are more likely to adopt IFRS and reveal more risk information than small firms. This study’s findings are relevant for market regulators in their attempt to improve corporate risk disclosures among listed firms in Saudi Arabia.

scholarly journals The disclosure of enterprise risk management (ERM) information: An overview of Canadian regulations for risk disclosure

2013 ◽  
Vol 2 (4) ◽  
pp. 13-21 ◽  
Author(s):  
Michael Maingot ◽  
Tony Quon ◽  
Daniel Zeghal
Keyword(s):  
Financial Reporting ◽  
Annual Report ◽  
Risk Disclosure ◽  
International Regulation ◽  
Financial Reporting Standards ◽  
Accounting Disclosures ◽  
Enterprise Risk ◽  
The Us ◽  
Risk Disclosures ◽  
Disclosure Obligations

This paper discusses the mandatory risk disclosures in Canada under International Financial Reporting Standards (IFRS). U.S. mandatory accounting disclosures of risk are also briefly examined, since some Canadian companies are cross-listed in the US. Mandatory disclosures of risk under the Basel II and Basel III Accords for the international regulation of banks are discussed as well as the assessment of ERM by Standard & Poor’s. The risk disclosures in the Management Discussion & Analysis (MD&A) section of the annual report prescribed by the Canadian Securities Administrators (CSA) in National Instrument 51-102 Continuous Disclosure Obligations are examined. Since these risk disclosures are voluntary, the actual disclosures in the MD&A section of the annual report are entirely at the discretion of management subject to effective board oversight.

scholarly journals Determinants of financial instruments risk disclosure: An empirical analysis in the banking sector

2020 ◽  
Vol 17 (2) ◽  
pp. 20-31
Author(s):  
Alessandra Allini ◽  
Luca Ferri ◽  
Marco Maffei ◽  
Annamaria Zampella
Keyword(s):  
Banking Sector ◽  
Banking System ◽  
Optimal Level ◽  
Financial Instruments ◽  
Risk Disclosure ◽  
Country Factors ◽  
Ifrs 7 ◽  
European Banking ◽  
Country Selection ◽  
The Uk

This study investigates the effects of firm and country factors, considered as determinants of the financial instruments risk disclosure (FIRD) proxied by IFRS 7 in the European banking system. We select 582 banks-year observations based on the largest five European economies (France, Germany, Italy, Spain and the UK) as provided by the International Monetary Fund (IMF). Our analysis covers a period of 8 years (2007-2014) and adopts an OLS model. Results show that both firm (the type of auditor, board size and profitability) and country factors (financing environment, regulatory environment, and organizational status) affect FIRD. Limitations for this paper could relate to country selection, as well as on the breadth of the sample. Nevertheless, these aspects could unveil possible areas of future inquiry. The contribution of the study is twofold. It enriches the literature about firm and country determinants on financial instruments risk disclosure, as combined rather than single-standing variables. Yet, it draws the attention of banks’ management and investors on what the crucial factors to reach an optimal level of FIRD are and gain the confidence of capital markets, reducing information asymmetries. This is the first empirical investigation on the determinants of FIRD, using IFRS 7, in the European banking sector that adopts firm and country factors in a combined effort.

Risk Disclosures in the Annual Reports of Italian Listed Companies

2014 ◽  
pp. 141-168
Author(s):  
Lorenzo Neri ◽  
Antonella Russo
Keyword(s):  
Voluntary Disclosure ◽  
Stock Exchange ◽  
Empirical Work ◽  
Annual Reports ◽  
Risk Disclosure ◽  
Listed Firms ◽  
Risk Disclosures ◽  
The Relationship ◽  
Increases In Risk ◽  
Risk Reporting

The study examines the relevance of risk reporting in the field of firm voluntary disclosure with an empirical work on Italian listed firms. The motivation of this study is the implementation of the Directive 51/2003/CE in Italy (D.Lgs. 32/2007), a sample of companies listed on the Italian Stock Exchange is selected to investigate the relationship between risk disclosure and company characteristics. This paper explores whether there are significant increases in risk reporting over a period of five years and investigates if risk disclosure is influenced only by new law requirement or also by other possible drivers. A content analysis is performed to obtain a measure of risk narrative disclosure. Then several hypothesis tests are carried out to verify whether there are any corporate differences between companies with different levels of risk disclosure, using univariate and multivariate analysis. Our results on the first question document significant increases in Italian companies' levels of risk disclosures. We find also that the disclosure is not only determined by the new law requirements but also by other drivers such as company size.

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