IDEAS home Printed from https://ideas.repec.org/a/fan/frfrfr/vhtml10.3280-fr2013-003007.html
   My bibliography  Save this article

Risk Disclosures in the Annual Reports of Italian Listed Companies

Author

Listed:
  • Lorenzo Neri
  • Antonella Russo

Abstract

The study examines the relevance of risk reporting in the field of firm voluntary disclosure with an empirical work on Italian listed firms. The motivation of this study is the implementation of the Directive 51/2003/CE in Italy (D.Lgs. 32/2007), a sample of companies listed on the Italian Stock Exchange is selected to investigate the relationship between risk disclosure and company characteristics. This paper explores whether there are significant increases in risk reporting over a period of five years and investigates if risk disclosure is influenced only by new law requirement or also by other possible drivers. A content analysis is performed to obtain a measure of risk narrative disclosure. Then several hypothesis tests are carried out to verify whether there are any corporate differences between companies with different levels of risk disclosure, using univariate and multivariate analysis. Our results on the first question document significant increases in Italian companies? levels of risk disclosures. We find also that the disclosure is not only determined by the new law requirements but also by other drivers such as company size.

Suggested Citation

  • Lorenzo Neri & Antonella Russo, 2013. "Risk Disclosures in the Annual Reports of Italian Listed Companies," FINANCIAL REPORTING, FrancoAngeli Editore, vol. 2013(3-4), pages 141-168.
    • Handle: RePEc:fan:frfrfr:v:html10.3280/fr2013-003007
    as

    Download full text from publisher

    File URL: http://www.francoangeli.it/riviste/Scheda_Rivista.aspx?IDArticolo=51213&Tipo=ArticoloPDF
    Download Restriction: Single articles can be downloaded buying download credits, for info: https://www.francoangeli.it/DownloadCredit
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Begoña Giner Inchausti, 1997. "The influence of company characteristics and accounting regulation on information disclosed by Spanish firms," European Accounting Review, Taylor & Francis Journals, vol. 6(1), pages 45-68, May.
    2. J.David Cabedo & José Miguel Tirado, 2004. "The disclosure of risk in financial statements," Accounting Forum, Taylor & Francis Journals, vol. 28(2), pages 181-200, June.
    3. Linsley, Philip M. & Shrives, Philip J., 2006. "Risk reporting: A study of risk disclosures in the annual reports of UK companies," The British Accounting Review, Elsevier, vol. 38(4), pages 387-404.
    4. Jane Davison, 2008. "Rhetoric, repetition, reporting and the “dot.com” era: words, pictures, intangibles," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 21(6), pages 791-826, August.
    5. Vivien Beattie & Bill McInnes & Stella Fearnley, 2004. "A methodology for analysing and evaluating narratives in annual reports: a comprehensive descriptive profile and metrics for disclosure quality attributes," Accounting Forum, Taylor & Francis Journals, vol. 28(3), pages 205-236, September.
    6. Gul, Ferdinand A. & Leung, Sidney, 2004. "Board leadership, outside directors' expertise and voluntary corporate disclosures," Journal of Accounting and Public Policy, Elsevier, vol. 23(5), pages 351-379.
    7. Ray Donnelly & Mark Mulcahy, 2008. "Board Structure, Ownership, and Voluntary Disclosure in Ireland," Corporate Governance: An International Review, Wiley Blackwell, vol. 16(5), pages 416-429, September.
    8. Marie Chavent & Yuan Ding & Linghui Fu & Herve Stolowy & Huiwen Wang, 2006. "Disclosure and determinants studies: An extension using the Divisive Clustering Method (DIV)," European Accounting Review, Taylor & Francis Journals, vol. 15(2), pages 181-218.
    9. Andrew Marshall & Pauline Weetman, 2007. "Modelling Transparency in Disclosure: The Case of Foreign Exchange Risk Management," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 34(5-6), pages 705-739.
    10. Nava Subramaniam & Lisa McManus & Jiani Zhang, 2009. "Corporate governance, firm characteristics and risk management committee formation in Australian companies," Managerial Auditing Journal, Emerald Group Publishing, vol. 24(4), pages 316-339, April.
    11. Giacomo Boesso & Kamalesh Kumar, 2007. "Drivers of corporate voluntary disclosure," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 20(2), pages 269-296, April.
    12. Bernard Raffournier, 1995. "The determinants of voluntary financial disclosure by Swiss listed companies," European Accounting Review, Taylor & Francis Journals, vol. 4(2), pages 261-280.
    13. S. Lim & Z. Matolcsy & D. Chow, 2007. "The Association between Board Composition and Different Types of Voluntary Disclosure," European Accounting Review, Taylor & Francis Journals, vol. 16(3), pages 555-583.
    14. Hassan, Omaima A.G. & Romilly, Peter & Giorgioni, Gianluigi & Power, David, 2009. "The value relevance of disclosure: Evidence from the emerging capital market of Egypt," The International Journal of Accounting, Elsevier, vol. 44(1), pages 79-102, March.
    15. anonymous, 2001. "Guidance on risk management of leveraged financing," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Jun, pages 413-414.
    16. Abraham, Santhosh & Cox, Paul, 2007. "Analysing the determinants of narrative risk information in UK FTSE 100 annual reports," The British Accounting Review, Elsevier, vol. 39(3), pages 227-248.
    17. Beretta, Sergio & Bozzolan, Saverio, 2004. "A framework for the analysis of firm risk communication," The International Journal of Accounting, Elsevier, vol. 39(3), pages 265-288.
    18. Verrecchia, Robert E., 2001. "Essays on disclosure," Journal of Accounting and Economics, Elsevier, vol. 32(1-3), pages 97-180, December.
    19. Philip M. Linsley & Michael J. Lawrence, 2007. "Risk reporting by the largest UK companies: readability and lack of obfuscation," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 20(4), pages 620-627, July.
    20. Edward H. Bowman, 1984. "Content Analysis of Annual Reports for Corporate Strategy and Risk," Interfaces, INFORMS, vol. 14(1), pages 61-71, February.
    21. Li, Feng, 2008. "Annual report readability, current earnings, and earnings persistence," Journal of Accounting and Economics, Elsevier, vol. 45(2-3), pages 221-247, August.
    22. Florence Depoers, 2000. "A cost benefit study of voluntary disclosure: some empirical evidence from French listed companies," European Accounting Review, Taylor & Francis Journals, vol. 9(2), pages 245-263.
    23. Feng Li, 2010. "The Information Content of Forward‐Looking Statements in Corporate Filings—A Naïve Bayesian Machine Learning Approach," Journal of Accounting Research, Wiley Blackwell, vol. 48(5), pages 1049-1102, December.
    24. Andrew Marshall & Pauline Weetman, 2007. "Modelling Transparency in Disclosure: The Case of Foreign Exchange Risk Management," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 34(5‐6), pages 705-739, June.
    25. Fluck, Zsuzsanna, 1998. "Optimal Financial Contracting: Debt versus Outside Equity," The Review of Financial Studies, Society for Financial Studies, vol. 11(2), pages 383-418.
    26. Miihkinen, Antti, 2012. "What Drives Quality of Firm Risk Disclosure?," The International Journal of Accounting, Elsevier, vol. 47(4), pages 437-468.
    27. Healy, Paul M. & Palepu, Krishna G., 2001. "Information asymmetry, corporate disclosure, and the capital markets: A review of the empirical disclosure literature," Journal of Accounting and Economics, Elsevier, vol. 31(1-3), pages 405-440, September.
    28. Beretta, Sergio & Bozzolan, Saverio, 2004. "Reply to: Discussions of "A framework for the analysis of firm risk communication"," The International Journal of Accounting, Elsevier, vol. 39(3), pages 303-305.
    29. Dobler, Michael, 2008. "Incentives for risk reporting -- A discretionary disclosure and cheap talk approach," The International Journal of Accounting, Elsevier, vol. 43(2), pages 184-206.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Elshandidy, Tamer & Fraser, Ian & Hussainey, Khaled, 2013. "Aggregated, voluntary, and mandatory risk disclosure incentives: Evidence from UK FTSE all-share companies," International Review of Financial Analysis, Elsevier, vol. 30(C), pages 320-333.
    2. Rodríguez Domínguez, Luis & Noguera Gámez, Ligia Carolina, 2014. "Corporate reporting on risks: Evidence from Spanish companies," Revista de Contabilidad - Spanish Accounting Review, Elsevier, vol. 17(2), pages 116-129.
    3. Ott, Christian, 2020. "The risks of mergers and acquisitions—Analyzing the incentives for risk reporting in Item 1A of 10-K filings," Journal of Business Research, Elsevier, vol. 106(C), pages 158-181.
    4. Miihkinen, Antti, 2012. "What Drives Quality of Firm Risk Disclosure?," The International Journal of Accounting, Elsevier, vol. 47(4), pages 437-468.
    5. Miihkinen, Antti, 2013. "The usefulness of firm risk disclosures under different firm riskiness, investor-interest, and market conditions: New evidence from Finland," Advances in accounting, Elsevier, vol. 29(2), pages 312-331.
    6. Elshandidy, Tamer & Fraser, Ian & Hussainey, Khaled, 2015. "What drives mandatory and voluntary risk reporting variations across Germany, UK and US?," The British Accounting Review, Elsevier, vol. 47(4), pages 376-394.
    7. Ibrahim, Awad Elsayed Awad & Hussainey, Khaled & Nawaz, Tasawar & Ntim, Collins & Elamer, Ahmed, 2022. "A systematic literature review on risk disclosure research: State-of-the-art and future research agenda," International Review of Financial Analysis, Elsevier, vol. 82(C).
    8. Moumen, Néjia & Ben Othman, Hakim & Hussainey, Khaled, 2015. "The value relevance of risk disclosure in annual reports: Evidence from MENA emerging markets," Research in International Business and Finance, Elsevier, vol. 34(C), pages 177-204.
    9. Nadezda Gulko & Catriona Hyde & Nina Seppala, 2017. "Disclosure of corporate risks and governance before, during and after the global financial crisis: case study in the UK construction industry in 2006–2009," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 14(3), pages 207-223, August.
    10. Hassanein, Ahmed, 2022. "Risk reporting and stock return in the UK: Does market competition Matter?," The North American Journal of Economics and Finance, Elsevier, vol. 59(C).
    11. Elshandidy, Tamer & Shrives, Philip J., 2016. "Environmental Incentives for and Usefulness of Textual Risk Reporting: Evidence from Germany," The International Journal of Accounting, Elsevier, vol. 51(4), pages 464-486.
    12. Shivaani, M.V. & Agarwal, Nishant, 2020. "Does competitive position of a firm affect the quality of risk disclosure?," Pacific-Basin Finance Journal, Elsevier, vol. 61(C).
    13. Riccardo, Macchioni & Giuseppe, Sannino & Gianluca, Ginesti & Carlo, Drago, 2013. "Firms’ disclosure compliance with IASB’s Management Commentary framework:an empirical investigation," MPRA Paper 59321, University Library of Munich, Germany.
    14. Francesco De Luca & Ho-Tan-Phat Phan, 2019. "Informativeness Assessment of Risk and Risk-Management Disclosure in Corporate Reporting: An Empirical Analysis of Italian Large Listed Firms," FINANCIAL REPORTING, FrancoAngeli Editore, vol. 2019(2), pages 9-41.
    15. Omaima Hassan & Claire Marston, 2010. "Disclosure measurement in the empirical accounting literature - a review article," Accountancy Discussion Papers 1004, Accountancy Research Group, Heriot Watt University.
    16. Khandelwal, Chandni & Kumar, Satish & Madhavan, Vinodh & Pandey, Nitesh, 2020. "Do board characteristics impact corporate risk disclosures? The Indian experience," Journal of Business Research, Elsevier, vol. 121(C), pages 103-111.
    17. Enzo Scannella & Salvatore Polizzi, 2021. "How to measure bank credit risk disclosure? Testing a new methodological approach based on the content analysis framework," Journal of Banking Regulation, Palgrave Macmillan, vol. 22(1), pages 73-95, March.
    18. Rossella Leopizzi & Antonio Iazzi & Andrea Venturelli & Salvatore Principale, 2020. "Nonfinancial risk disclosure: The “state of the art” of Italian companies," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(1), pages 358-368, January.
    19. Issal Haj-Salem & Salma Damak Ayadi & Khaled Hussainey, 2020. "The joint effect of corporate risk disclosure and corporate governance on firm value," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 17(2), pages 123-140, September.
    20. Rihab Grassa & Nejia Moumen & Khaled Hussainey, 2021. "What drives risk disclosure in Islamic and conventional banks? An international comparison," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 6338-6361, October.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fan:frfrfr:v:html10.3280/fr2013-003007. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Stefania Rosato (email available below). General contact details of provider: http://www.francoangeli.it/riviste/sommario.aspx?IDRivista=163 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.