Search results

1 – 10 of over 20000
To view the access options for this content please click here

Abstract

Details

Journal of Financial Regulation and Compliance, vol. 13 no. 3
Type: Research Article
ISSN: 1358-1988

Keywords

To view the access options for this content please click here
Article
Publication date: 5 October 2015

Liang Song

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…

Downloads
2896

Abstract

Purpose

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.

Design/methodology/approach

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.

Findings

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.

Originality/value

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.

Details

International Journal of Accounting & Information Management, vol. 23 no. 4
Type: Research Article
ISSN: 1834-7649

Keywords

To view the access options for this content please click here
Article
Publication date: 31 July 2007

Philip M. Linsley and Michael J. Lawrence

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…

Downloads
5259

Abstract

Purpose

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.

Design/methodology/approach

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.

Findings

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.

Research limitations/implications

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.

Practical implications

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.

Originality/value

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.

Details

Accounting, Auditing & Accountability Journal, vol. 20 no. 4
Type: Research Article
ISSN: 0951-3574

Keywords

To view the access options for this content please click here
Article
Publication date: 22 July 2021

Malek Hamed Alshirah, Ahmad Farhan Alshira’h and Abdalwali Lutfi

This study aims to empirically examine whether the political connection is related to risk disclosure practices. The study also seeks to contribute to the existent risk

Abstract

Purpose

This study aims to empirically examine whether the political connection is related to risk disclosure practices. The study also seeks to contribute to the existent risk disclosure literature by investigating the moderator effect of family ownership on this relationship.

Design/methodology/approach

The content analysis approach was used to collect data and determine the level of risk disclosure over the non-financial Jordanian firms listed on 1Amman Stock Exchange. The sample of this study contains 376 annual reports over four years from 2014 to 2017. It used the random effect regressions to examine the hypothesis of the study.

Findings

The results show that politically connected companies disclose less risk information than the unconnected ones in Jordan. The results also refer that family ownership contributes in mitigating the negative effect of the political connection on the level of corporate risk.

Practical implications

The results have implications for regulatory institutions such as the Jordan Securities Commission to take the negative effect of political connection in their consideration and impose further regulations to monitor this board’s attribute and control politicians’ domination on the board decisions.

Originality/value

The current study also contributes to the body of literature by investigating the effects of the political connections on the level of risk disclosure in the financial reports. To the best of the authors’ knowledge, the current study is the first to examine the effect of the political connection on the risk disclosure practices. Moreover, the study is among the first studies that examine the moderating role of family ownership on such relationship.

Details

Meditari Accountancy Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2049-372X

Keywords

To view the access options for this content please click here
Book part
Publication date: 1 October 2015

Ikseon Suh and Joseph Ugrin

This study investigates how disclosure of the board of directors’ leadership and role in risk oversight (BODs oversight disclosure) influences investors’ judgments when…

Abstract

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.

Details

Advances in Accounting Behavioral Research
Type: Book
ISBN: 978-1-78441-635-5

Keywords

To view the access options for this content please click here
Article
Publication date: 9 February 2021

Stuart Mcchlery and Khaled Hussainey

This paper contributes to risk management research with reference to disclosure of risk specific information within the oil and gas industry. This paper provides empirical…

Abstract

Purpose

This paper contributes to risk management research with reference to disclosure of risk specific information within the oil and gas industry. This paper provides empirical evidence regarding voluntary and mandatory disclosure behaviour from both a quantitative and qualitative perspective.

Design/methodology/approach

A longitudinal empirical study examines probabilistic reserve quantum reporting of UK companies, over a time-period spanning voluntary and mandatory disclosure. The researchers analyse disclosure behaviour under voluntary and mandatory time spans using a logistical regression approach to measure determinants of risk reporting. Form of regulation is considered as the fundamental driver for disclosure whilst controlling for other relevant variables. Implications for developing international regulation are presented with suggestions for further research.

Findings

Mandatory reporting is not seen as a significant influence to disclosure. Degree of risk, quality of audit firms, level of stock exchange and organisational visibility each impact on disclosure. The findings indicate that a mandatory disclosure approach is ineffective, partially explained by mimetic and normative forces and a balancing of agency-related costs and benefits. There is an inverse relationship between level of risk and risk reporting.

Research limitations/implications

Generalisation of the findings is limited due to the specific context of the extractive industry.

Practical implications

The paper seeks to inform the International Accounting Standards Board's (IASB) on-going consideration of risk reporting and also its extractive industries deliberations.

Originality/value

The paper provides original insight into the area of risk management with particular focus on risk specificity and quantitative metrics for risk profiling not previously tested. The paper introduces risk profiling as a variable in risk disclosure.

Details

Journal of Applied Accounting Research, vol. 22 no. 3
Type: Research Article
ISSN: 0967-5426

Keywords

To view the access options for this content please click here
Article
Publication date: 23 March 2020

Salvatore Polizzi and Enzo Scannella

This paper aims to examine the market risk disclosure practices of large Italian banks. The contribution provides insights on the way banks should provide information…

Abstract

Purpose

This paper aims to examine the market risk disclosure practices of large Italian banks. The contribution provides insights on the way banks should provide information about market risk. The problem related to the asymmetric information between banks from one side, and investors and stakeholders on the other, represents a crucial issue that requires further considerations by scholars and regulators.

Design/methodology/approach

This contribution adopts a mixed methodological approach to analyse both qualitative and quantitative profiles of market risk disclosure in banking. This paper analyses the most important documents Italian banks are required to prepare for risk disclosure purposes, namely the management commentary, the Basel Pillar 3 disclosure report and the notes.

Findings

The results show that banks do not fully exploit the potentialities of management commentary and Pillar 3 disclosure report. Various areas of information overlapping between the different financial reports worsen the overall comprehensibility and relevance of bank risk reporting.

Practical implications

The reduction of the information overlapping, the careful choice of the location of the information and more appropriate use of the management commentary to provide qualitative information about market risk strategies represent crucial areas of improvement banks and regulators should take into account.

Originality/value

Providing an in-depth analysis of the market risk disclosure practices of a sample of large Italian banks, this paper detects the main drawbacks of their market risk reporting and provides useful recommendations to improve it.

Details

Journal of Financial Regulation and Compliance, vol. 28 no. 3
Type: Research Article
ISSN: 1358-1988

Keywords

To view the access options for this content please click here
Article
Publication date: 10 August 2020

Fragiskos K. Gonidakis, Andreas G. Koutoupis, Anastasios D. Tsamis and Maria-Eleni K. Agoraki

The purpose of this study is to investigate risk disclosure in listed Greek companies. The effects of the financial crisis were also considered.

Abstract

Purpose

The purpose of this study is to investigate risk disclosure in listed Greek companies. The effects of the financial crisis were also considered.

Design/methodology/approach

This study aimed to determine the risk-reporting practices of Greek’s non-financial companies listed on the Athens Stock Exchange through a content analysis of their annual reports.

Findings

Risk identification and anticipation protect businesses and create shareholder value. In recent years, particularly since the economic crisis, risk has become one of the most important business issues. This study concluded that during the crisis, there was an increase in disclosure. Financial, personnel and legal risks were the most reported types of risk. This study also found liquidity to be a very important issue.

Research limitations/implications

Content analysis has limitations because subjectivity cannot be eliminated. This study measured only the quantity, not the quality, of risk disclosure. The quality of risk reporting will be examined in future research.

Originality/value

This is the first study on risk disclosure in the non-financial companies listed on the Athens Stock Exchange to conduct a content analysis of the corporate annual reports.

Details

Accounting Research Journal, vol. 33 no. 4/5
Type: Research Article
ISSN: 1030-9616

Keywords

To view the access options for this content please click here
Article
Publication date: 24 April 2020

Malek Hamed Alshirah, Azhar Abdul Rahman and Ifa Rizad Mustapa

This study aims at examining the level of risk of disclosure practices and the effect of four board of directors' characteristics (board size, board meetings, CEO duality…

Abstract

Purpose

This study aims at examining the level of risk of disclosure practices and the effect of four board of directors' characteristics (board size, board meetings, CEO duality and board expertise) on these practices in the Jordanian context. This study also adds to the body of literature by examining the moderating effect of family ownership on the relationship between the board of directors' characteristics and the corporate risk disclosure.

Design/methodology/approach

The sample of this study contains the non-financial Jordanian firms listed on Amman Stock Exchange (ASE). 376 annual reports of the sampled firms over four years from 2014 to 2017 were used. The content analysis approach was used to collect data and to determine the level of risk disclosure by computing the number of risk-related sentences in the annual reporting. To test the study's hypothesis, the random effect model was employed.

Findings

The empirical results show that the total of the risk disclosure sentences for each firm ranges from a minimum value of 2 sentences to a maximum value of 61 sentences, and the mean of CRD is 28 sentences. The results also indicate that the board expertise is positively related with the level of risk disclosure. Conversely, CEO duality has a negative impact on the risk disclosure practices. However, the results failed to support that the board size and the board meetings have a significant effect on the level of risk disclosure. Furthermore, the study demonstrated that the family ownership moderates the relationship between the board of directors and the corporate risk disclosure.

Practical implications

The finding of this study is more likely be useful for many concerned parties, researchers, authorities, investors and financial analysts alike in understanding the current practices of the risk disclosure in Jordan, thus helping them in reconsidering and reviewing the accounting standards and improving the credibility and transparency of the financial reports in the Jordanian capital market.

Originality/value

The current study contributes to the literature of risk disclosure because the previous research has paid little attention to this topic in Jordan. To the best knowledge of the researcher, this study is the first Jordanian study that focuses on examining the relationship between the board of directors' characteristics and the corporate risk disclosure in the non-financial sector. Furthermore, it is the first study that examines the moderating role of family ownership on such relationships. Consequently, the results of the current study draw attention to the CRD practices and the monitoring role of board of directors in Jordan.

Details

EuroMed Journal of Business, vol. 15 no. 2
Type: Research Article
ISSN: 1450-2194

Keywords

Content available
Article
Publication date: 20 May 2020

James Guthrie, Francesca Manes Rossi, Rebecca Levy Orelli and Giuseppe Nicolò

The paper identifies the types of risks disclosed by Italian organisations using integrated reporting (IR). This paper aims to understand the level and features of risk

Downloads
1118

Abstract

Purpose

The paper identifies the types of risks disclosed by Italian organisations using integrated reporting (IR). This paper aims to understand the level and features of risk disclosure with the adoption of IR.

Design/methodology/approach

The authors use risk classifications already provided in the literature to develop a content analysis of Italian organisations’ integrated reports published.

Findings

The content analysis reveals that most of the Italian organisations incorporate many types of risk disclosure into their integrated reports. Organisations use this alternative form of reporting to communicate risk differently from how they disclose risks in traditional annual financial reporting. That is, the study finds that the organisations use their integrated reports to disclose a broader group of risks, related to the environment and society, and do so using narrative and visual representation.

Originality/value

The paper contributes to a narrow stream of research investigating risk disclosure provided through IR, contributing to the understanding of the role of IR in representing an organisational risk.

Details

Meditari Accountancy Research, vol. 28 no. 6
Type: Research Article
ISSN: 2049-372X

Keywords

1 – 10 of over 20000