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This study aims to examine the effects of firms’ accounting disclosure policies on stock price synchronicity and stock crash risk, using a sample including 13 emerging markets. Furthermore, this research investigates how these relationships are affected by country-level investor protection and firm-level governance rankings.

This paper uses accounting disclosure measures constructed based on survey questions by Credit Lyonnais Securities Asia (2001, CLSA). The accounting disclosure measure is used to explain the two dependent variables, stock price synchronicity and stock crash risk. The stock price synchronicity measure is defined as the logistic transformation of R2 following Hutton et al. (2009) and Jin and Myers (2006). R2 is taken from the estimation of an extended market model. The stock crash risk variable is measured as the frequency difference between extremely negative and positive stock return residues following Jin and Myers (2006). These stock return residues are taken from the estimation of an extended market model. Because the CLSA firm-level disclosure data are from 2000, this paper matches other data taken from the same year, for consistency. The final sample includes 204 observations in 13 emerging countries.

This paper finds that firms’ stocks are less synchronized with the entire market and have less crash risk if firms have superior accounting disclosure policies. These results suggest that the cost to collect firm-specific information may be decreased for investors if firms are more transparent. Thus, these firms’ stocks have more firm-specific information content. These results also suggest that management is less likely to hide some negative information and release such negative information suddenly in the future if firms have higher levels of accounting disclosure. Thus, these firms’ stocks are less likely to crash. In addition, the influences of firms’ accounting disclosure policies on stock price synchronicity and crash risk are more significant for firms with superior country-level investor protection and firm-level governance rankings. These results imply that external investors place more value on accounting disclosure by well-governed firms because firms with superior governance standards are less likely to intentionally disclose misleading information. Thus, these firms’ stocks can incorporate more firm-specific information and have less crash risk.

The current study is the first to show that the effects of accounting disclosure on stock price synchronicity and crash risk are more pronounced for firms with superior country-level investor protection and firm-level governance standards. Thus, this research extends the literature by providing a comprehensive picture of the influences of accounting disclosure on stock markets. In addition, the existing literature (Chen et al., 2006; Durnev et al., 2004) shows that firms with lower stock price synchronicity are associated with higher investment efficiency because managers invest based on the information in stock prices. Obviously, higher stock crash risk is highly related to higher bankruptcy risk for firms. Thus, examining the effects of accounting disclosure on stock price synchronicity and stock crash risk is of obvious importance to policy makers.

The purpose of this paper is to examine risk disclosures by UK companies within their annual reports. Tests are performed to measure the level of the readability of the risk disclosures and to assess whether directors are deliberately obscuring bad risk news.

The paper draws upon methodologies developed in prior empirical studies of annual report readability. Thus it uses the Flesch Reading Ease formula to measure the readability of the risk disclosures and coefficients of variation are used to measure obfuscation. A content analysis approach is adopted to identify risk disclosures.

The paper finds that the mean Flesch reading ease ratings for the sample companies are all below 50 indicating that the level of readability of the risk disclosures is difficult or very difficult and this supports prior research examining the readability of sample passages in annual reports. No evidence is found to suggest that directors are deliberately obfuscating or concealing bad risk news through their writing style.

The paper also finds that the Flesch reading ease ratings measure the readability, not the understandability, of disclosures and whilst actions can be taken to minimise problems associated with reliability when performing content analysis they cannot be wholly eliminated.

The paper shows that there have been calls for improved risk disclosures to enable stakeholders to better understand a company's risk position. Requiring directors to issue extra risk information will not, however, lead to enhanced risk communication unless the readability of the risk disclosures is also improved.

In this paper it is shown that there have been no prior studies that focus upon testing for readability and obfuscation in risk disclosures. It is important that transparent risk information is provided to the marketplace and therefore this study is valuable in its examination of the clarity of communication of published risk information.

With the rise of mandating climate-related disclosures (CRD), this paper aims to investigate how energy and agriculture markets are exposed to climate disclosure risk.

Using the multivariable simultaneous quantile regression and data from 1 January 2017 to 29 February 2024, the authors examine daily and monthly responses of energy and agriculture markets to climate disclosure risk, energy risk, market sentiment, geopolitical risk and economic policy risk. The sample covers the global market, Australia, Canada, European Union (EU), Hong Kong, Japan, New Zealand, Singapore, the UK and the USA.

The results show that climate disclosure risk creates both positive and negative shocks in the energy and agriculture markets, and the impacts are asymmetric across quantiles in different economies. The higher the climate disclosure risk, the greater impact of crude oil future on the energy sector in North America (Canada and the USA) and Europe (EU and the UK), but no greater effects in Asia Pacific (Australia, New Zealand and Singapore). The agriculture sector can hedge against economic policy and geopolitical risks, but it is highly exposed to climate disclosure and energy risks.

This study timely contributes to the modest literature on the asymmetric effects of climate disclosure risk on the energy and agriculture markets at the global and national levels. The findings offer practical implications for policymakers and investment practitioners in understanding financial effects of mandating CRD to diversify risks depending upon market conditions and policy uncertainty.

This paper aims to examine the association between perceived firm risk and two reporting mechanisms: risk disclosure and earnings smoothing in the UK context.

This study juxtaposes three competing views, the “null”, the “divergence” and the “convergence” hypotheses, and empirically investigates whether risk disclosure and earnings smoothing affect firm perceived risk for a sample of large UK firms with rich and poor information environments. This study also uses the global financial crisis as an external shock on overall risk in the economy to investigate when and how managers use these two reporting mechanisms to shape the firm perceived risk.

This paper documents that risk disclosures have no significant effect on investors’ risk perceptions, consistent with risk disclosures containing boilerplate and generic statements about firm risk. This paper also finds that earnings smoothing reduces investors’ risk perceptions, reflecting investors’ interpretations about future firm performance. Additional tests reveal that earnings smoothing is not associated with perceived firm risk for firms with rich information environments and expanded risk disclosures. Furthermore, reporting smooth earnings decreases perceived firm risk following the global financial crisis. These findings are robust to alternative specifications and measures of earnings smoothing as well as post-filing perceived firm risk.

This study does not distinguish between the garbling role and the informational role of earnings smoothing. The risk disclosure measurement used in this study, developed based on UK annual reports, may limit the generalizability of findings to other countries.

The findings suggest that managers should revise their risk disclosure strategies to provide in-depth details on firm risk. Investors might require information and thorough assessment to evaluate investment risks when firms provide generic risk disclosures and smoothed earnings by consulting sources like financial intermediaries. Regulators should keep an eye on firms reporting boilerplate risk disclosures and on how smoothing earnings impacts the firm perceived risk following economic turmoil, to guide interventions that promote market stability.

The findings provide new insights into when and how managers use their financial reporting discretion to make firms appear less risky and, therefore, influence investors’ risk perceptions.

This study aims to investigate the relationship between corporate governance characteristics and risk disclosure in Shariah-compliant financial firms operating in Kuwait. It aims to provide insights into the factors influencing risk disclosure practices within these institutions.

The research used manual content analysis to quantify risk disclosure levels in the annual reports of 47 Shariah-compliant financial companies listed in Kuwait in 2020. Subsequently, multiple regression analysis was conducted to assess the impact of various corporate governance factors on the extent of risk disclosure.

The study reveals that while Kuwaiti Shariah-compliant firms exhibit limited risk disclosure in their annual reports, larger boards and committees, along with a higher number of independent directors, positively influence the level of risk disclosure. Interestingly, the size of the Shariah supervisory boards did not show a significant impact on risk disclosure practices.

These findings hold regulatory implications for Kuwait, highlighting the need to ensure information adequacy and promote market efficiency. Additionally, they offer practical insights for managers and investors seeking to optimize fund sourcing and diversify investment portfolios within the context of Shariah-compliant financial institutions.

This study contributes to the existing literature by providing empirical evidence on the relationship between corporate governance characteristics and risk disclosure in the specific context of Shariah-compliant financial firms operating in Kuwait. Furthermore, it identifies avenues for future research to delve into the influence of additional governance factors on risk disclosure practices within this unique financial landscape.

Heterogeneous risk disclosure has been proven to improve the efficiency of new stock issuance, but excessive risk disclosure during the IPO may lead to irrational underestimation of the company, which is different from the original intention of management's detailed disclosure. Therefore, this study aims to examine the impact of IPO heterogeneous risk disclosure on earnings management motivations from the information transfer perspective of earnings management.

The sample includes 2,000 listed companies listed firms on Shanghai and Shenzhen Stock Exchanges from 2007 to 2022. This study uses the pretrained ERNIE model to measure text similarity in the prospectus to measure the heterogeneity of IPO risk disclosure.

This study empirically finds that heterogeneous IPO risk disclosure suppresses the opportunistic motivation of earnings management because managers tend to use earnings management to leverage information transmission functions. Such an effect is more pronounced in firms with higher analyst attention, lower marketization levels and non-state-owned. And heterogeneous risk disclosure may inhibit management’s over-investment behavior, thereby reducing the possibility of management engaging in opportunistic earnings management. Besides, price discounts are used to distinguish opportunistic and non-opportunistic earnings management and carry out a quasi-natural experimental design to demonstrate that marketization can enhance the relationship between heterogeneous risk disclosure and earnings management.

This study contributes evidence regarding the economic consequences of managerial earnings management behavior related to heterogeneous IPO risk disclosure. It supports highlighted firms in the IPO risk information disclosure to mitigate potential adverse outcomes through earnings management. This contributes to the literature and enhances information transparency in the capital market, fostering the healthy development of China’s capital market.

The purpose of this paper is to examine the possibility of a curvilinear relationship between governance structure and nonfinancial risk disclosure. This paper also examines the moderating role of ethical values on the governance structure and nonfinancial risk disclosure relationship.

The sample of this paper contains 71 nonfinancial firms listed on the Saudi Stock Exchange from 2013 to 2020 (568 firm-year observations). The authors use OLS regressions to test the hypotheses.

The authors find there is a U-shaped relationship between governance structure and nonfinancial risk disclosure. Moreover, they show that ethical values moderate the relationship between governance structure and nonfinancial risk disclosure.

The findings of this study offer implications for policy makers and firm managers in Saudi Arabia which there should periodically assess and adapt their governance frameworks due to potential fluctuations in the optimal level resulting from internal or external disruptions.

To the best of the authors’ knowledge, this is the first study in Saudi Arabia that provides new empirical evidence on the curvilinear relationship between governance structure and nonfinancial risk disclosure and the moderating role of ethical values on this relationship.

This paper examines the impact of founder ownership concentration (FOC) on risk disclosures. It further investigates the moderating role of risk governance in the association between FOC and risk disclosures.

We use data from the top 200 Indian listed firms as our sample and rely on ordinary least squares (OLS) for our results. In addition, we use the propensity score matching, Heckman selection model and instrumental variable estimates for robustness checks.

We find that FOC decreases the risk disclosures. However, the effectiveness of risk management committee composition (risk governance) mitigates the negative influence of FOC on risk disclosures.

The paper is built on the agency theory. Based on the agency theory, the ownership concentration has two implications: first, it reduces the conflicts between managers and shareholders. Here, the managers act in favour of shareholders and therefore, brings more risk disclosers. Second, it invites conflicts between controlling and minority shareholders. The study is, therefore, interesting to see the cost and benefits of FOC on risk disclosures.

The study has practical implications for the regulatory bodies to encourage risk disclosures and benefit the outsiders of the firm. It also has implications for the companies to see the benefits of risk management committee as improved risk governance.

It contributes to the literature of risk disclosures and risk governance in emerging economies. It is the first study to investigate the role of risk governance in mitigating the adverse effects of founder’s ownership on risk disclosures in developing economies. It also contributes to the theory of agency cost and information asymmetry.

This study investigates how disclosure of the board of directors’ leadership and role in risk oversight (BODs oversight disclosure) influences investors’ judgments when information on risk exposures is disclosed. The theoretical lens through which we examine this issue involves negativity bias. Sixty-two stock market investors who engage in the evaluation and/or investment of stocks on a regular or professional basis participated in our study. Our results reveal that the addition of BODs oversight disclosure (positive information) does not carry significant weight on investor judgments (i.e., attractiveness and investment) when financial statement disclosures indicate a high level of operational and financial risk exposures (negative information). In contrast, under the condition of a low level of risk exposures, BODs oversight disclosure causes investors to assess higher risk in terms of worry, catastrophic potentials and unfamiliarity about risk information and, in turn, make less favorable investor judgments. Our findings add to the literature on negativity bias and contribute to the debate on the usefulness of disclosures about risk.