Corporate risk disclosure by UK firms: trends and determinants

Abstract

This study explores risk disclosure practice using content analysis of 156 annual reports prepared by 52 UK listed companies in three different periods (1998, 2001 and 2004). The study relates the extent of risk disclosure to firm-specific characteristics. The study found, a trend of increasing amounts of risk disclosure in the annual report over the six-year period influenced by accounting regulation and accounting institutes' recommendations. US dual listing and involvement in heavy industry are significantly and positively correlated with the level of risk information disclosed by the sampled companies. Risk disclosure is not related to size or leverage.

Determinants of narrative risk disclosures in UK interim reports

“…Following prior studies (e.g., Linsley and Shrives, 2006;Rajab and Handley-Schachler, 2009), content analysis has been employed to measure the level of risk disclosure in the interim reports. We use the number of risk-related sentences as a measure of risk disclosure levels.…”

A divulgação do risco nas demonstrações financeiras: uma análise ao anexo das sociedades não financeiras portuguesas

“…A teoria da Agência e a teoria da Legitimidade apontam que as entidades de maior dimensão apresentam um maior interesse público e, como tal, apresentam necessidades adicionais de divulgação, suportando a existência de relação e/ou associação e/ou diferenças significativas entre a dimensão das entidades e a divulgação do risco (Beattie et al, 2004;Deumes, 2008;Ereira, 2007;Höring & Gründl, 2011;Jiang, 2008;Kongprajya, 2010;Linsley & Shrives, 2006;Meijer, 2011;Rajab & Handley-Schachler, 2009;Tröster, 2005;Vandemaele et al, 2009;Yampolskaya, 2006).…”

“…A teoria da Agência suporta igualmente hipóteses de relação e/ou associação e/ou análise de diferenças entre a divulgação de matérias relativas ao risco e o próprio risco da entidade (baseado, designadamente, no endividamento empresarial), rendibilidade e a política de distribuição de dividendos (Ereira, 2007;Höring & Gründl, 2011;Kongprajya, 2010;Michiels, 2008;Oliveira & Rodrigues, 2011;Rajab & Handley-Schachler, 2009;Tröster, 2005;Vandemele et al, 2009), assim como entre o setor ou mercado de enquadramento das entidades analisadas (Deumes, 2008;Jiang, 2008;Kongprajya, 2010;Oliveira & Rodrigues, 2011;Rajab & Handley-Schachler, 2009;Yampolskaya, 2006). Em síntese, na revisão feita aos diversos estudos acerca do nível de risco divulgados pelas entidades, quer seja de forma voluntária ou de forma obrigatória, verifica-se, na generalidade, a relação positiva entre o nível de divulgação e a dimensão da entidade.…”

The Need for Corporate Risk Disclosure in the Nigerian Listed Companies Annual Reports

“…Literature Review The American Institute of Certified Public Accountants (AICPA, 1987) states that, the users of financial statements are desperately demanding for sufficient information disclosures that will help them to assess corporate risk and uncertainties accordingly (Rajab and Schachler, 2009). Add that, in U.K, the Companies Act, 1985 requires companies for a description of the principal risks and uncertainties that companies' faces in a business review; the disclosures shall be discussed as part of the Directors' Report in the content of companies' annual reports (Companies Act 1985, S.234).…”

“…Moreover, enhancing corporate disclosure by providing sufficient risk-related information has a potential bearing upon the corporate performance (Rajab and Schachler, 2009). However, the Nigerian constitution has recognized only two (2) accounting professional institutes, but neither the Institute of Chartered Accountant of Nigeria (ICAN), nor the Association of National Accountant of Nigeria (ANAN) had made similar efforts as that of their foreign counterpart.…”