The disclosure of operational risk in tunisian insurance companies

ABSTRACT Over the last two decades, financial scandals arising from operational risk have grown and spread throughout the world. They have led authorities to enact new regulations to include control of operational risk and its disclosure to the market. It turns out that this disclosure is crucial for strengthening market discipline and taking advantage of benefits. This paper examines the disclosure practices of operational risk in Tunisian insurance companies during the period 2000-2009. First we attempt to assess the level of disclosure of operational risk in insurance companies and, in a second step, we try to ascertain its main determinants. In line with concepts based on the theory of corporate finance, our empirical work indicates that the level of operational risk disclosure is significantly related to the size of a company and to the intensity of its provisions and its leverage. These results are consistent with some theoretical perspectives. However, profitability and the cost of capital are not significant.