Please use this identifier to cite or link to this item: http://hdl.handle.net/1893/19545
Appears in Collections:Accounting and Finance Journal Articles
Peer Review Status: Refereed
Title: Aggregated, voluntary, and mandatory risk disclosure incentives: Evidence from UK FTSE all-share companies
Authors: Elshandidy, Tamer
Fraser, Ian
Hussainey, Khaled
Contact Email: i.a.m.fraser@stir.ac.uk
Keywords: Aggregated
Voluntary
Mandatory risk disclosures
Automated content analysis
LMM
High- and low-risk firms
Issue Date: Dec-2013
Publisher: Elsevier
Citation: Elshandidy T, Fraser I & Hussainey K (2013) Aggregated, voluntary, and mandatory risk disclosure incentives: Evidence from UK FTSE all-share companies, International Review of Financial Analysis, 30, pp. 320-333.
Abstract: This paper investigates the impact of corporate risk levels on aggregated, voluntary and mandatory risk disclosures in the annual report narratives of UK non-financial listed companies. We find that firms characterised by higher levels of systematic, financing risks and risk-adjusted returns and those with lower levels of stock return variability are likely to exhibit significantly higher levels of aggregated and voluntary risk disclosures. The results also show that firms of large size, high dividend-yield, high board independence, low (high) insider (outsider) ownership, and effective audit environments are likely to exhibit higher levels of aggregated and voluntary risk disclosures than other firms. Similarly, mandatory risk disclosures are influenced positively by firm size, dividend-yield and board independence and negatively by high leverage. The results suggest that managers of firms exhibiting greater compliance with mandatory regulations have a greater propensity to make voluntary risk disclosures. When we distinguish between high- and low-risk firms, we find that high-risk firms appear to be more sensitive to underlying risk levels, resulting in more disclosure of both voluntary and mandatory risk information than in the case of low-risk firms. The results generally support the present UK emphasis on encouraging rather than mandating risk disclosure. Nevertheless, under this regime, the voluntary risk disclosures of some firms, e.g., those characterised by higher-volatility market returns, do not reflect their underlying risk levels.
Type: Journal Article
URI: http://hdl.handle.net/1893/19545
DOI Link: http://dx.doi.org/10.1016/j.irfa.2013.07.010
Rights: The publisher does not allow this work to be made publicly available in this Repository. Please use the Request a Copy feature at the foot of the Repository record to request a copy directly from the author. You can only request a copy if you wish to use this work for your own research or private study.
Affiliation: University of Bristol
Accounting and Finance
University of Plymouth

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