Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Determinants of narrative risk disclosures in UK interim reports

Determinants of narrative risk disclosures in UK interim reports Purpose – The purpose of this paper is to contribute to the existing disclosure literature by examining the determinants of narrative risk information in the interim reports for a sample of UK non‐financial companies. Design/methodology/approach – This study uses the manual content analysis to measure the level of risk information in interim report narrative sections prepared by 72 UK companies. It also uses the ordinary least squares regression analysis to examine the impact of firm‐specific characteristics and corporate governance mechanisms on narrative risk disclosures. Findings – The empirical analysis shows that large firms are more likely to disclose more risk information in the narrative sections of interim reports. In addition, the analysis shows that industry activity type is positively associated with levels of narrative risk disclosure in interim reports. Finally, the analysis shows statistically insignificant impact of other firm‐specific characteristics (liquidity, gearing, profitability, and cross‐listing) and corporate governance mechanisms on narrative risk disclosure. Practical implications – The study's findings have practical implications. It informs investors about the characteristics of UK companies that disclose risk information in their interim reports. For example, the findings show that narrative risk disclosures are affected by firm size and industry type rather than firms' risk levels (e.g. financing risk measured by the gearing ratio or liquidity risk measured by lower liquidity ratios). Practical implications for managers from these findings are that, in order to keep investors satisfied, companies with high levels of financing and liquidity risks should look at investors' demands for risk disclosure. This will help investors when making their investment decisions. Originality/value – The determinants of narrative risk disclosure in interim reports have not been explored so clearly in prior research and, therefore, this paper is the first of its kind to examine this research issue for a sample of UK companies. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Journal of Risk Finance Emerald Publishing

Determinants of narrative risk disclosures in UK interim reports

The Journal of Risk Finance , Volume 13 (2): 15 – Feb 24, 2012

Loading next page...
 
/lp/emerald-publishing/determinants-of-narrative-risk-disclosures-in-uk-interim-reports-gOQJkoiiaO

References (71)

Publisher
Emerald Publishing
Copyright
Copyright © 2012 Emerald Group Publishing Limited. All rights reserved.
ISSN
1526-5943
DOI
10.1108/15265941211203189
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to contribute to the existing disclosure literature by examining the determinants of narrative risk information in the interim reports for a sample of UK non‐financial companies. Design/methodology/approach – This study uses the manual content analysis to measure the level of risk information in interim report narrative sections prepared by 72 UK companies. It also uses the ordinary least squares regression analysis to examine the impact of firm‐specific characteristics and corporate governance mechanisms on narrative risk disclosures. Findings – The empirical analysis shows that large firms are more likely to disclose more risk information in the narrative sections of interim reports. In addition, the analysis shows that industry activity type is positively associated with levels of narrative risk disclosure in interim reports. Finally, the analysis shows statistically insignificant impact of other firm‐specific characteristics (liquidity, gearing, profitability, and cross‐listing) and corporate governance mechanisms on narrative risk disclosure. Practical implications – The study's findings have practical implications. It informs investors about the characteristics of UK companies that disclose risk information in their interim reports. For example, the findings show that narrative risk disclosures are affected by firm size and industry type rather than firms' risk levels (e.g. financing risk measured by the gearing ratio or liquidity risk measured by lower liquidity ratios). Practical implications for managers from these findings are that, in order to keep investors satisfied, companies with high levels of financing and liquidity risks should look at investors' demands for risk disclosure. This will help investors when making their investment decisions. Originality/value – The determinants of narrative risk disclosure in interim reports have not been explored so clearly in prior research and, therefore, this paper is the first of its kind to examine this research issue for a sample of UK companies.

Journal

The Journal of Risk FinanceEmerald Publishing

Published: Feb 24, 2012

Keywords: United Kingdom; Information disclosure; Financial reporting; Reports; Risk management; Interim reports; Content analysis; Narrative risk disclosure

There are no references for this article.