Risk Disclosure Analysis in the Corporate Governance Annual Report Using Fuzzy-Set Qualitative Comparative Analysis

Abstract

This paper explores the necessary and sufficient conditions of good Corporate Governance practices for high risk disclosure by firms in their Corporate Governance Annual Report. Additionally, we explore whether those recipes have changed during the financial crisis. With a sample of 271 Spanish listed companies, we applied fuzzy-set qualitative comparative analysis to a database of financial and non-financial data. We report that Board of Directors independence, size, level of activity and gender diversity, CEO duality, Audit Committee independence, being audited by the Big Four auditing firms and the presence of institutional investors are associated with high risk disclosure. The conditions included in almost every combination are the presence of institutional investors and being audited by the Big Four. We found similar combinations for 2006 and 2012, while the analysis for 2009 showed the lowest number of causal configurations.KEYWORDS | Board composition, corporate governance, fuzzy-set qualitative comparative analysis, independent director, risk disclosure. RESUMO O presente artigo investiga as condições necessárias e suficientes das boas práticas de Governança RAE-Revista de Administração de Empresas | FGV/EAESP

Determinants of risk reporting by Portuguese and Spanish non-finance companies

“…Prior literature on the influence of corporate governance mechanisms and RRD are focused on Anglo-Saxon countries (Taylor et al, 2010;Abraham and Cox, 2007;Elzahar and Hussainey, 2012;Ntim et al, 2013), developing Islamic/African countries (Mokhatar and Mellet, 2013;Agyei-Mensah, 2017), India (Singh, 2017) and European Latin countries (Oliveira et al, 2011;Elshandidy and Neri, 2015;Allini et al, 2016;Madrigal et al, 2015;Carmona et al, 2016), using different explanatory variables to assess different aspects of the same constructs (such as board composition, ownership structure, and audit committee). (Oliveira et al, 2011), Italy (Elshandidy and Neri, 2015;Allini et al, 2016) and Spain (Madrigal et al, 2015;Carmona et al, 2016). Elshandidy and Neri (2015) (Guerreiro et al, 2012), but they have a 'stakeholder" governance model (García-Castro et al, 2008 (Magnan and Markarian, 2011).…”

“…In the Portuguese context, Oliveira et al 2011found a positive association. In the Spanish setting, findings have not been conclusive (Madrigal et al, 2015;Carmona et al, 2016).…”

“…They concluded that financial analysts pay greater attention to detailed, customized, future-oriented individual risks, rather than generic information on risk management and internal control systems, which is less transparent, less relevant, and from a lower quality. On the other hand, prior literature on RRD has indicated that some corporate governance mechanisms are crucial to improve the quality of risk disclosures (Taylor et al, 2010;Abraham and Cox, 2007;Elzahar and Hussainey, 2012;Ntim et al, 2013;Mokhatar and Mellet, 2013;Agyei-Mensah, 2017;Singh, 2017;Oliveira et al, 2011;Elshandidy and Neri, 2015;Allini et al, 2016;Madrigal et al, 2015;Carmona et al, 2016). Consequently, our second research question is: since Code Law countries are characterized by a "stakeholder" governance 4 model, in which way the influence of corporate governance mechanisms on RRD is mediated by strategic/institutional legitimacy interests?…”

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

“…We established three starting points for selecting our panel of experts. The first was to guarantee that the participants had an adequate knowledge of the subject (Anderson, 1993;Campoy Aranda & Gomes Araújo, 2015;Cantrill, Sibbald, & Buetow, 1996;Landeta, 2006;Ortega Mohedano, 2008;Pill, 1971). The second was to ensure the variety of their experiences (Heras, Cilleruelo, & Iradi, 2008;Hsu & Sandford, 2007;Linstone, 1978;Ortega Mohedano, 2008).…”

Factores que influyen en la preferencia por el tipo de estructura de liderazgo del máximo cuerpo colegiado de universidades iberoamericanas

“…La estructura del liderazgo de los directorios tiene especial importancia en aspectos como el desempeño de las organizaciones, la transparencia, la divulgación de información y la gestión de las firmas, entre otros aspectos, y es por ello que ha sido materia de estudio en los planos teórico y empírico (Acar y Ozkan, 2017;Alfraih, 2016;Arora y Sharma, 2016;Carmona, De-Fuentes y Ruiz, 2016;Duru, Raghavan y Zampelli, 2016;Lai y Tam, 2017;Krause, 2017;Nas y Kalaycioglu, 2016;Petrou y Procopiou, 2016;Qian, Wang, Geng, y Yu, 2017;Rahman y Hamdam, 2017;Rao y Tilt, 2016;Sheikh y Khan, 2016;Titova, 2016;Torchia y Calabro, 2016;Tang, 2017;Villanueva-Villar, Rivo-López, y Lago-Peñas, 2016;Withers y Fitza, 2017). En el plano teórico, dos teorías se disputan la explicación del tipo de estructura del liderazgo; las diferencias argumentales entre ambos enfoques radican en el rol prioritario que juegan los directorios en una organización.…”