Improving the relevance of risk factor disclosure in corporate annual reports

Abraham, Santhosh and Shrives, Philip (2014) Improving the relevance of risk factor disclosure in corporate annual reports. The British Accounting Review, 46 (1). pp. 91-107. ISSN 0890-8389

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Official URL: http://dx.doi.org/10.1016/j.bar.2013.10.002

Abstract

This research develops a model for assessing the quality of risk disclosures and applies the proposed model to four companies in the food production and processing sector. We contribute to the literature by extending prior work on risk disclosure quality using a longitudinal approach to assess the quality of risk reporting. While previous studies have described disclosure practices, this paper adopts a normative approach to disclosure. By suggesting a way of improving risk reporting disclosures, the paper provides guidance for current and future company managers. In line with previous research, this paper identifies certain problems with existing risk disclosures. Results suggest that company managers prefer providing disclosures that are symbolic rather than substantive. We argue that institutional factors and proprietary costs contribute towards and can explain this behaviour. In suggesting a way forward we highlight the role that stakeholders including managers, users, regulators and auditors can play in improving the quality of risk reporting. Flexibility in reporting could be maintained by adopting a properly monitored ‘comply or explain’ approach.

Item Type: Article
Additional Information: Published online before print.
Uncontrolled Keywords: voluntary disclosure, risk reporting, corporate guidance
Subjects: N100 Business studies
N300 Finance
N400 Accounting
Department: Faculties > Business and Law > Newcastle Business School > Accounting and Finance
Depositing User: Becky Skoyles
Date Deposited: 18 Nov 2013 08:40
Last Modified: 08 May 2017 14:43
URI: http://nrl.northumbria.ac.uk/id/eprint/14628

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