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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 identify mutually exclusive risk categories and determine whether these categories effectively capture the potential impact of risk disclosures on the initial returns of initial public offerings (IPOs) in the financial and non-financial sectors.

Data were collected from 131 Indian IPO prospectuses (104 non-financial and 27 financial) issued between 2015 and 2021. Content analysis was performed to identify mutually exclusive risk categories, and the effects of these categories on initial IPO returns were assessed by regression analysis

The findings revealed that risk factor disclosures have a significant impact on underpricing, but not all risk factors are relevant. In the current study, in the financial sector, IPO underpricing was mostly driven by technological and competitive risk factors. In the non-financial sector, underpricing was predominantly influenced by operating risk and compliance risk factors.

The limitations of this study include the use of sentence-based context analysis, which does not assess the quality of risk disclosures. The statistical data reduction technique used to generate mutually exclusive risk categories may also be a limitation.

This research has the potential to assist companies in standardizing the disclosure of risks within IPO prospectuses. The insights gained can inform market regulators in designing policies aimed at aiding investors in formulating investment strategies, ultimately enhancing transparency and clarity regarding information disclosure. Moreover, the findings offer valuable guidance to investors in selecting IPOs aligned with their risk tolerance levels.

From a societal perspective, this study represents advancements by guiding regulators towards developing and regulating standardized, mutually exclusive risk factors. Such measures can aid investors in enhancing their decision-making perspectives regarding IPOs, promoting a more informed and confident investment environment.

This study is a pioneering attempt to address knowledge gaps by identifying distinct categories of risk disclosures in IPO prospectuses and examining their potential influence on IPO underpricing in the financial and non-financial sectors in India.

This study aims to investigate the impact of diverse practices in sustainability reporting and assurance on the disclosure of sustainable development goals (SDGs). Specifically, the authors examine the disclosure of SDGs along two dimensions: disclosure breadth, denoting the number of goals mentioned, and disclosure depth, encompassing the extent of actions disclosed to advance these goals.

Using a panel Tobit regression analysis, the authors analyse the communication on progress questionnaires from 299 companies (resulting in 1,015 firm-year observations) participating in the United Nations Global Compact from 2017 to 2021.

The findings revealed that greater adherence to Global Reporting Initiative standards increases SDG disclosure breadth; external assurance using publicly recognised standards, more than proprietary methods, is associated with SDG disclosure breadth and depth; and the review of information by multiple stakeholders improves the depth of SDG disclosure more than evaluation by a panel of peers.

The originality of this study lies in its examination of the intricate interplay between sustainability disclosure and assurance practices, on the one hand, and the disclosure of SDGs, on the other. Uniquely, the authors consider the various levels of implementation of these practices, allowing for a comprehensive assessment of their influence on SDG disclosure.

This paper aims to examine the effects of the 2014 European regulatory reform on auditors’ activity, the audit outcome and the audit market, with a focus on the Spanish market.

The research is based on in-depth, semistructured interviews with partners of the main audit firms operating in the Spanish market. This qualitative approach provides a precise identification of the cause-effect relationships of the new measures introduced by the European audit regulation.

The findings indicate that, based on auditors’ opinions, the costs of the main regulatory changes outweigh the benefits. The European Union (EU) Audit Regulation imposes more demanding provisions, such as an extended auditor’s report, mandatory audit firm rotation, more banned nonaudit services and stricter quality controls, resulting in substantial side effects on audit activity and the audit market. This could undermine the objective of enhancing the quality of audit services.

To the best of the authors’ knowledge, this is the first study to analyze the effect of the 2014 EU regulatory reform on audit activity, audit market and audit outcome based on auditors’ perceptions. The findings may be of interest to academics, professionals and regulators alike, as they offer valuable insights for assessing the effectiveness of the new audit provisions. Additionally, the qualitative methodology used facilitates a causal analysis of the key elements introduced by the regulations, potentially paving the way for future research avenues.

In recent times, stakeholders have called on corporate organizations especially those charged with governance to embrace full disclosure on non-financial issues, especially sustainability reporting. Based on this premise, this study aims to examine the influence of corporate board and assurance on sustainability reporting practices (SRP) of selected 80 firms from 8 countries in sub-Saharan Africa.

To measure the corporate board, the authors use both board variables and audit committee variables. Also, the authors adapted the sustainability score model as used by previous authors in the field of sustainability disclosure to measure SRPs. The analysis was done using both ordered logistic regression and probit regression models.

The results show that the combination of board corporate and assurance has a positive and significant impact on the sustainability reporting practice of selected firms in sub-Saharan Africa.

The study places emphasis on the need for strong collaboration between the corporate board and external assurance in evaluating and enhancing the quality of sustainability disclosure.

The study bridged the gap in the literature in the area of corporate board, assurance and SRP of corporate firms which has received little attention within sub-Saharan Africa.

Expanding on the real-world financial market framework and considering the current market turmoil, with cryptocurrencies (where contracts for difference (CFDs) are extremely common) (Hasso et al., 2019) displaying unprecedented volatility, the authors aim to test in an online laboratory setting whether displaying a risk warning message is truly effective in reducing the level of risk taken and whether the placement of this method makes a difference.

To explore the impact of risk disclosure framing on risk-taking behavior, the authors conducted an online pair-wise lottery choice experiment. In addition to manipulating risk awareness through the presence or absence of risk warning messages of varying intensity, the authors also considered dynamic inconsistency, cognitive ability and questionnaire-based financial risk tolerance (FRT) scores. The authors aimed to identify potential relationships between these variables and experimentally elicited risk aversion. The authors' study offers valuable insights into the complex nature of risky decision-making and sheds light on the importance of considering dynamic inconsistency in addition to risk awareness and aversion.

The authors' results provide statistical evidence for the efficacy of informative and very salient messages in mitigating risky decision, hinting at several policy implications. The authors also provide some statistical evidence in support of the relationship between cognitive abilities and risk preferences. The authors detect that individual with low cognitive abilities scores display great risk aversion.

This study investigates the impact of risk warning messages on investment decisions in an online laboratory setting – a unique approach. However, the authors go beyond this and also examine the potential influence of dynamic inconsistency on decision-making, adding further value to the literature on this topic. To ensure a comprehensive understanding of the participants, the authors collect data on cognitive ability and FRT using questionnaires. This study provides a simple and cost-effective framework that can be easily replicated in future research – a valuable contribution to the field.

Drawing insights from institutional theory, this paper aims to examine whether and to what extent banks have reconfigured their management control systems (MCSs) in response to growing institutional pressures towards sustainability, understood as environmental, social and governance (ESG) issues.

The authors conducted an exploratory study at the three largest Italian banking groups to shed light on changes made in MCSs to account for ESG issues. The analysis is based on 12 semi-structured interviews with managers from the sustainability and controls areas, as well as from other relevant operational areas particularly concerned with the integration process of ESG issues. Additionally, secondary data sources were used. The Malmi and Brown (2008) MCS framework, consisting of a package of five types of formal and informal control mechanisms, was used to structure and analyse the empirical data.

The examined banks widely implemented numerous changes to their MCSs as a response to the heightened sustainability pressures from regulatory bodies and stakeholders. In particular, with the exception of action planning, the results show an extensive integration of ESG issues into the five control mechanisms of Malmi and Brown’s framework, namely, long-term planning, cybernetic, reward/compensation, administrative and cultural controls.

By identifying the approaches banks followed in reconfiguring traditional MCSs, this research sheds light on how adequate MCSs can promote banks’ “sustainable behaviours”. The results can, thus, contribute to defining best practices on how MCSs can be redesigned to support the integration of ESG issues into the banks’ way of doing business.

Overall, the findings support the theoretical assertion that institutional pressures influence the design of banks’ MCSs, and that both formal and informal controls are necessary to ensure a real engagement towards sustainability. More specifically, this study reveals that MCSs, by encompassing both formal and informal controls, are central to enabling banks to appropriately understand, plan and control the transition towards business models fully oriented to the integration of ESG issues. Thereby, this allows banks to effectively respond to the increased stakeholder demands around ESG concerns.

This study investigates the impact of corporate governance on FinTech disclosure levels in Jordanian conventional and Islamic banks. It aims to determine whether governance mechanisms affect disclosure practices in the FinTech sector, exploring the interplay between governance and transparency in financial innovations.

The research methodology entails a thorough analysis of data from all 15 Jordanian conventional and Islamic banks listed on the Amman Stock Exchange, covering the period from 2015 to 2022. This study uses manual content analysis using a custom FinTech Disclosure Index (FDI) and quantitative analysis with a two-way clustered error regression model.

The findings show that corporate governance mechanisms, particularly board size, board meetings and “Big4” audit firms, are crucial in enhancing FinTech disclosure across conventional and Islamic banks. However, Islamic banks consistently show higher disclosure levels than their conventional counterparts, attributed to their distinct governance structures that emphasize ethical governance and transparency. These results indicate an awareness among decision-makers about the importance of business model transformation toward FinTech.

This study pioneers the introduction of FDI, using it for a novel comparative analysis of FinTech disclosure levels between Islamic and conventional banks. By exploring how various governance structures influence FinTech disclosure, this research provides fresh insights into the interplay between corporate governance and financial technologies in the banking sector.

This paper examines how firms respond to local government’s environment initiatives through textual analysis of government work reports (GWRs). This study aims to provide insights into how firms strategically respond to government’s environmental initiatives through their disclosure and investment practices.

This study uses a textual analysis of GWRs from China’s provinces. The frequency and change rate of environmental keywords in these reports are used as a measure of the government’s environmental initiatives.

This study finds that environmental disclosure scores in environmental, social and governance (ESG) reports increase with the frequency or change rate of environmental keywords in provincial GWRs. This effect is more pronounced for non-state-owned enterprises, firms in highly marketized provinces or those listed in a single capital market. However, there is no significant relationship between firms’ environmental investments and government initiatives, except for cross-listed firms in provinces with consistently high frequency of environmental keywords in their GWRs.

The findings indicate that government environmental initiatives can shape firms’ disclosure behaviors, yet have limited influence on investment decisions, suggesting that environmental disclosure could potentially be opportunistic. This underscores the need for more effective strategies to stimulate firms’ environmental investments.

This study provides valuable insights into the differential impacts of government environmental initiatives on firms’ disclosure and investment behaviors, contributing to the understanding of corporate environmental responsibility in the context of government initiatives.

This study aims to investigate the relationship between corporate environmental responsibility (CER) and risk-taking in Chinese A-share listed companies from 2011 to 2020. It seeks to understand the influence of CER on risk-taking behavior and explore potential moderating factors.

A quantitative approach is used, using data from Chinese A-share listed companies over the specified period. Regression analysis is used to examine the relationship between CER and risk-taking, while considering moderating variables such as performance aspiration, environmental enrichment and contextual factors.

The findings indicate that CER positively influences corporate risk-taking, with significant impacts on information asymmetry and corporate reputation. Moreover, positive performance aspiration strengthens the effect of CER on risk-taking, while negative performance aspiration and environmental enrichment weaken this effect. Cross-sectional analysis shows that the positive association between CER and risk-taking is more prominent for firms located in areas with strict environmental regulation, for nonstate-owned firms, and for firms with higher levels of internal control.

This research contributes to the literature by providing insights into the dynamics between CER and risk-taking in the Chinese market context. It expands existing knowledge by considering the influence of performance aspiration on this relationship, offering practical implications for firms seeking to enhance corporate performance through strategic management of environmental responsibilities.