Linsley, P.M. and Shrives, P.J. (2006) Risk reporting: A study of risk disclosures in the annual reports of UK companies. British Accounting Review, 38 (4). pp. 387-404. ISSN 0890-8389
The concepts of risk and risk management have received considerable attention lately, but this has yet to be reflected in empirical research examining firms’ risk reporting practices. This study seeks to address this gap in the literature and explores risk disclosures within a sample of 79 UK company annual reports using content analysis. A significant association is found between the number of risk disclosures and company size. Similarly a significant association is found between the number of risk disclosures and level of environmental risk as measured by Innovest EcoValue`21™ Ratings. However, no association is found between the number of risk disclosures and five other measures of risk: gearing ratio, asset cover, quiscore, book to market value of equity and beta factor. The paper also discusses the nature of the risk disclosures made by the sample companies specifically examining their time orientation, whether they are monetarily quantified and if good or bad risk news is disclosed. It was uncommon to find monetary assessments of risk information, but companies did exhibit a willingness to disclose forward-looking risk information. Overall the dominance of statements of general risk management policy and a lack of coherence in the risk narratives implies that a risk information gap exists and consequently stakeholders are unable to adequately assess the risk profile of a company.
|Keywords:||Risk; Risk management; Risk disclosure; Risk reporting; UK|
|Institution:||The University of York|
|Academic Units:||The University of York > The York Management School|
|Depositing User:||York RAE Import|
|Date Deposited:||28 Aug 2009 10:58|
|Last Modified:||28 Aug 2009 10:58|