Present and future of risk disclosure in Spanish non-financial listed companies

Abstract

Este trabajo investiga las razones y los beneficios esperados por las empresas españolas cotizadas no financieras para divulgar información sobre riesgos, así como las posibles motivaciones para no hacerlo. Investiga la situación actual de la divulgación de riesgos, pero también mira hacia adelante y estudia cómo será ésta en un futuro próximo. A la vista de un entorno cada vez más demandante de información, busca ideas que permitan mejorar esta práctica. Con el objetivo de conseguir los puntos de vista de las partes implicadas (preparadores y usuarios de la información de riesgos) y obtener una opinión consensuada entre ellos, realizamos un estudio Delphi. El grupo de expertos estuvo formado por veintidós personas, trece directores de auditoría interna de empresas españolas cotizadas no financieras, cinco analistas financieros y cuatro académicos. Realizamos tres rondas de preguntas entre los meses de enero y julio de 2017.El estudio concluye, entre otras cosas, que la demanda de información sobre riesgos aumentará en los próximos años, que los beneficios derivados de la divulgación compensan a las empresas de cualquier coste asociado a ella, y que el legislador debe desarrollar más disposiciones legales que aseguren mayor claridad y consistencia de la información, y mayor comparabilidad entre compañías. This paper researches the reasons and expected benefits of Spanish non-financial listed companies for disclosing risk information as well as the possible motivations for not doing so. It investigates the current situation of risk disclosure but also looks forward and studies what it will be like in the near future. In view of an increasingly information demanding environment, it looks for ideas for improving the risk disclosure practice.With the objective of gathering insights from the parties involved (preparers and users of risk information) and getting an agreed view among them, we conducted a Delphi study. The group of experts was made up of twenty-two people, thirteen internal audit directors from Spanish non-financial listed companies, five financial analysts and four scholars. We ran three rounds of questions between the months of January and July of 2017. The study concludes, among other findings, that the demand for risk disclosure will increase in coming years, that the benefits of disclosing offset any kind of associated costs, and that the policy maker should develop more legal provisions to ensure greater clarity and consistency of risk information and more comparability among companies.

Corporate governance and risk disclosure: evidence from integrated reporting adopters

“…Nevertheless, even in the context of regulations, many companies still tend to adopt a “box-ticking” approach (Association of Chartered Certified Accountants – ACCA, 2014, p. 9) to risk disclosure. This consists of a mere exercise of compliance with legal requirements without any increase in the significance or quality of the risk information provided to outsiders (Greco, 2012; ACCA, 2014; Amezaga-Alonso et al , 2020). Previous empirical research conducted on annual reports supported these arguments, highlighting that many companies still lag behind in the communication of risk information that can be helpful for investors and other stakeholders.…”

“…Previous empirical research conducted on annual reports supported these arguments, highlighting that many companies still lag behind in the communication of risk information that can be helpful for investors and other stakeholders. Specifically, a prevalent attitude towards providing boilerplate, generic, qualitative and backward-looking information, which mainly focuses on financial issues, persists (Beretta and Bozzolan, 2004; Lajili and Zéghal, 2005; Oliveira et al , 2011; Greco, 2012; Abraham and Shrives, 2014; Amezaga-Alonso et al , 2020). Many professional associations, interest groups and academics (ICAEW, 2011; ACCA, 2014; Amezaga-Alonso et al , 2020) have widely criticised this approach, advocating that corporate risks should not be discussed in isolation from the explanation of other corporate strategic dimensions.…”

“…Specifically, a prevalent attitude towards providing boilerplate, generic, qualitative and backward-looking information, which mainly focuses on financial issues, persists (Beretta and Bozzolan, 2004; Lajili and Zéghal, 2005; Oliveira et al , 2011; Greco, 2012; Abraham and Shrives, 2014; Amezaga-Alonso et al , 2020). Many professional associations, interest groups and academics (ICAEW, 2011; ACCA, 2014; Amezaga-Alonso et al , 2020) have widely criticised this approach, advocating that corporate risks should not be discussed in isolation from the explanation of other corporate strategic dimensions. In particular, they converge on the need to convey more forward-looking and quantitative information that makes investors and other stakeholders informed about the potential impact that both financial and non-financial risks may exert on the different dimensions of a firm’s current and future performance (ICAEW, 2011; ACCA, 2014; PricewaterhouseCoopers, 2014; Guthrie et al , 2020).…”

Firm performance and cost of equity capital: the moderating role of narrative risk disclosure quality in Egypt

“…Prior studies followed one of two main methodologies to assess the quality of risk disclosure, which are subjective or objective measurements. Subjective measurements are based on questionnaires [61], or interviews [7], while the objective measurements are directed towards the source of the original information to obtain the required information, such as constructing an index based on the FASB and IASB [35,36] qualitative characteristics of information [42,80], or content analysis [11,13,33,68].…”