of manufacturing (non-financial) companies in Indonesia, making companies less concerned about disclosing risk information that must be done. This condition is different from non-financial companies in Egypt, which is the object of research by Mokhtar & Mellet (2013). In Egypt's non-financial companies, regulations related to riskdisclosure have been regulated in Egyptian Accounting Standard (EAS) 25, both mandatory disclosure and voluntary disclosure. However, the results of this study are in line with the perspective of the cost of ownership, which states that companies become less motivated to conduct voluntary disclosure because potential competitors of the company can utilize the information disclosed to make decisions in entering the market (Mokhtar & Mellet, 2013). Therefore, many companies are reluctant to do voluntary disclosure, even though the company has a high level of competition because the information has the potential to be used by competitors, which ultimately harms the company. Besides, the wider the disclosure made by the company, the higher the costs incurred by the company to present the information. Chariri & Ghozali (2007) explained that financial accounting information would be sought to be presented in financial statements, as long as the benefits obtained from the presentation of information exceed the costs required to produce information. The disclosure of risk to non-financial companies in Indonesia is indeed more beneficial for investors than for the company itself. Investors can use riskdisclosure information as a basis for decisions regarding the allocation of funding sources. Whereas for companies, because the nature of riskdisclosure is still voluntary disclosure, the disclosure of this risk is limited to management's accountability to the principal regarding the performance that has been carried out. Not all risk information is disclosed, because the company will try to get funding sources from, while investor decisions regarding the allocation of funding sources are influenced by the type of business, whether the business is high or low risk. The implementation of voluntary disclosure is a trade-off that must be considered carefully for its costs and benefits. Based on this explanation, it can be concluded that in Indonesian manufacturing companies, the level of competition has not been able to influence riskdisclosure.
Despite the many actions taken in the last decade in China to ensure riskdisclosure, the quality of risk reporting by financial firms continues to be empirically debatable (Wang et al., 2008). Regarding risk reporting in other contexts; over the last decade a wealth of literature has emerged concerning investors’ risk perceptions of capital markets, observing the effects of riskdisclosure (Elshandidy and Shrives, 2016). These studies share a recognition that the motivations for risk related information can be explained by agency theory, when evaluating the capacity of riskdisclosure to decrease information asymmetries (Elshandidy and Neri, 2015). The effects of disclosure on market liquidity are well documented in developed countries (Miihkinen, 2013; Campbell et al., 2014; Elshandidy and Neri, 2015); however, as mentioned above, less attention has been given to emerging markets. This is especially important if we consider the situational context of the financial companies listed in the Chinese market: factors like the high percentage of state ownership and the low percentage of negotiable securities (OECD, 2011) render the riskdisclosure of financial companies in the Chinese context fundamental to investors and analysts.
This study investigates the narratives risk disclosures of the four British financial institutions that were adversely affected during the 2008 banking crisis. This investigation uses content analysis with the aid of Concordance software to explore the riskdisclosure of these companies for the period 1998-2008. Risk disclosures in the Business Review sections of the annual reports of the banks were analysed into their historic and forward looking contents, and current firm performance was measured with respect to earnings per share (EPS) and dividend, while future performance was measured by growth in EPS, and positive time lag in EPS. Consistent with its predictions, the study found a significant negative relationship between the extent of historic narrative disclosures and current and future firm performance, and a significant positive relationship between forward looking narrative risk disclosures and both current and future firm performance. Additional analysis shows that optimistic and pessimistic narrative risk disclosures are not significant in explaining current and future firm performance for these firms.
Many of the riskdisclosure studies are derived from empirical research based on the UK, Dutch, French, German, and Anglo- Saxon nations (Abraham and Cox, 2007; Abraham and Shrives, 2013; Carlon et al., 2008; Deumes, 2008; Deumes and Knechel, 2008; Elshandidy et al., 2013; Elzahar and Hussainey, 2012; Kajüter, 2006; Lajili, 2007; Lajili and Zéghal, 2005; Linsley and Shrives, 2006), Latin nations (Beretta and Bozzolan, 2004; Combes-Thuélin et al., 2006; Oliveira et al., 2011a; Oliveira et al., 2011b), Arab nations (Hassan, 2009), and Asia-Pacific nations (Amran et al., 2009; Konishi and Ali, 2007; Mohobbot, 2005). In general, these studies show that the disclosure of risks is generic, vague, inadequate, backward looking, and qualitative in nature and does not meet the demands of the stakeholders (Oliveira et al., 2011a). In addition, researches on riskdisclosure have focused on voluntary riskdisclosure of the internal controls in annual reports (Deumes and Knechel, 2008), management discussion and analysis segments (Beretta and Bozzolan, 2004; Mohobbot, 2005), mandatory disclosure of risk in management reports (Kajüter, 2006) and mandatory and voluntary disclosure of risk
According to the ICAEW (1997), risk reporting needs to include hard and comparable information so as to be considered as reliable, and the best way to incorporate it is to measure and quantify risks using both accounting and non-accounting information. Riskdisclosure should focus on what is more important to the activity of the enterprise, not what is easiest to quantify and report about. Although it is not always possible to measure the quantitative impact of all risks inside a wide range of risks, this should not necessarily restrict the information released by a company. When considering risks, we should consider all types of business risks, not only the ones arising from the use of financial instruments. ‘All types of risk are relevant to financial reporting, as any information that may help investors to assess future prospects should be available’ (ICAEW 1997, p.26). Inadequate financial reporting leads to an investors’ perception of uncertainty about the future cash flows of the firm. The ICAEW (2011) suggests seven principles to follow when reporting risk in order to improve it: tell users what they need to know, focus on quantitative information, integrate into other disclosures, think beyond the annual reporting cycle, keep list of principal risks short, highlight current concerns and report on risk experience.
This study aims to test empirically the effect of environmental risk on the cost of equity. Some studies prove that riskdisclosure has consequences on the capital market. In addition, disclosure of risk is different from other disclosures made by the company, because it provides information about possible future conditions, and often risk information is considered to have a negative nature. When environmental risk disclosures are considered to have a negative nature, investors will respond negatively. This is contrary to the disclosure theory which says that company disclosures will have a positive impact. Therefore this study attempts to analyze the impact of disclosure of environmental risks in Indonesia (Siskawati et al., 2016). The results of this study will provide two benefits. First, this study contributes to the accounting and financial literature, namely expanding the disclosure concept of by analyzing whether environmental risk is one of the information used by investors. Secondly, the results of this study are expected to be used by policy makers and standards, namely Otoritas Jasa Keuangan (OJK) in Indonesia by showing empirical evidence regarding the need for attention to environmental issues, because it provides high economic consequences for the company. This is expected to encourage OJK to make regulations regarding the disclosure of more detailed and binding environmental risks, so that environmental sustainability is maintained and ultimately the risks to investors are reduced.
Furthermore, those fifty words were used as keywords to explore sentences using those words in the narrative of currency riskdisclosure. The result, as shown in the Words Tree (see Appendix 1) showed that firms were not only got exposed from the risk of changes of the USD currency, but also got exposed from the risk of changes in of Japanese Yen currency (JPY). The both currency risk exposures were not only impact on the position of the fair value of liabilities of the firms at current financial position, but also have an impact on the firms’ operation. This happens due to firms used both foreign currencies in their transactions. The impact of currency risk exposure among firms were stated differently. Some firms, state that the impact was significantly harming for them, some of them stated that the impact was still tolerated, some of them state that they were successful to prevent the risk exposure, and some of them did not feel the negative impact of the change of currency risk.
Martson and Shrives (1991) defined the annual report as being the ―main disclosure vehicle‖ and it is this data source that has been the primary focus of the main riskdisclosure studies to date. Whether or not the annual report is the main disclosure vehicle could however be contested by the fact that disclosures can also be made privately in meetings with investors and analysts (Craven and Marston, 1999). A study by Lang and Lundholm (1993) concluded that the disclosure level through the annual report is positively correlated to disclosures communicated to investors and the market through other media. Given the increased interest in riskdisclosure, active voluntary disclosure debate and the connection amongst disclosure vehicles it is logical that as disclosures in annual reports have been shown to increase as part of legitimacy repairing strategies, alternative disclosure vehicle utilisation should have also increased and therefore should also be analysed. Linsley et al. (2006) concluded that risks can alter dramatically over time which can make the yearly format of the annual report an inappropriate choice of disclosure vehicle. Linsley et al. (2006) went on to state that ―useful risk information may need disseminating by some other method‖ which again gives support to
The UK Supreme Court held in Montgomery v Lanarkshire HB (2015) that practitioners must take reasonable care to ensure patients are aware of any material risks involved in treatment. We reviewed all court decisions since Montgomery which deal with the case, to establish how this judgment is being interpreted by the courts and the implications of this for riskdisclosure in practice. We found that Montgomery’s application has been expanded in a number of ways: information about reasonable alternatives includes the provision of information about their risks and benefits; Montgomery applies to post- as well as pre-operative disclosure; and the timing of discussion with patients about risks is important. Conversely, there is evidence that the parameters of Montgomery are being curtailed, giving rise to questions about judicial commitment to patient autonomy. In some cases there is focus on the objective risks of procedures as opposed to patients’ subjective concerns; in others, causation of injury is sometimes a factor that will defeat claims. There are also further questions about whether patients now should accept more responsibility for the outcome of decisions they make. We conclude that practitioners engaged in discussions about the risks of proposed treatments and their alternatives have been left in a position of uncertainty by the courts in relation to the obtaining of informed consent in practice. It is now critical that updated guidance is provided by the UK General Medical Council to give practitioners and service providers confidence that they are adhering to the law.
sample period. It is also the largest listed bank on the Saudi stock market in terms of size (total assets). This result shows that the level of riskdisclosure is positively correlated with size. This is consistent with previous riskdisclosure studies that employed annual reports, such as Beretta and Bozzolan (2004), Linsley and Shrives (2006), Konishi and Mohobbot (2007), Lopes and Rodrigues (2007), Vandemele et al. (2009) and Mousa and Elamir (2013), which confirmed that size is positively correlated with the level of riskdisclosure. This outcome is also in line with signalling theory. According to signalling theory, larger companies rely more on external finance. Hence, they are incentivized to disclose more risk information in order to send a good signal to investors and creditors regarding their ability to manage risk. As has been established by prior investigation, leverage could affect the level of riskdisclosure since the level of riskdisclosure and the leverage ratio simultaneously increase or decrease. Moreover, firms with higher leverage are more likely to have a higher level of voluntary riskdisclosure in their annual reports than those with lower leverage (Deumes and Knechel 2008; Hassan 2009; Marshall and Weetman 2007; Taylor et al., 2010). The table above shows that Alrajhi Bank’s riskdisclosure levels decreased in tandem with the leverage ratio year by year over the entire sample period, confirming the above argument. This is also concurrent with signalling theory, whereby managers tend to provide more risk management information to send a good signal to debt holders regarding corporate ability to meet obligations (Oliveira et al., 2011b).
1.2. All Clients and prospective Clients should read carefully the following riskdisclosure and warnings contained in this document, before applying to the Company for a trading account and before they begin to trade with the Company. However, it is noted that this document cannot and does not disclose or explain all of the risks and other significant aspects involved in dealing in Financial Instruments. The notice was designed to explain in general terms the nature of the risks involved when dealing in Financial Instruments on a fair and non-misleading basis.
However, Taylor, (2011) states that communicating risk management and performance is inherently problematic, especially for narrative disclosures. The difficulty in riskdisclosure arises from “commercial sensitivity” of the information, which means that disclosing risk information can result to strategic exploitation by competitors and also the fact that inexact forward looking risk information can incite investors to sue the firm. For these reasons, Linsley & Shrives (2006) are of the opinion that corporate managers may not want to disclose risk information in annual reports. Their opinion confirms the proprietary costs hypothesis that, a third party whose interests are not aligned with the firm’s interests can use the disclosed information against this firm’s welfare. The impact of proprietary costs on firm value and its competitive position can lead to voluntary riskdisclosure dilemma.
Eccles (2001, p. 192) remarked that companies with more transparency will increase their credibility in the view of users, because they feel confident with their capability and strategy. Companies will not be afraid to describe their market plans and how well they are doing. Along with that, signalling theory suggests that highly profitable companies will send signals of their quality to investors (Watson, Shrives, & Marston, 2002). Highly profitable firms disclose more and are prone to provide information more repeatedly in their reports due to signalling for adverse selection. Signalling theory suggests that more profitable firms disclose more to inform their stake-holders about their good performance, but based on agency cost theory, less profitable firms disclose more to contextualize their worse financial performance (Inchausti, 1997). Moreover, Elshandidy et al. (2011) stated that large, lucrative companies provide more riskdisclosure than small and less profitable companies in order to signal their capability to identify and handle their risks. They found that low profit growth companies reassure users about their prospects of profit and growth through being more transparent in their voluntary disclosure.
that there was an insignificant correlation between the ownership diffusion pattern and the number of risk disclosures. However, the researchers still felt that there was an association between the two variables. They explained that managers could hold a high proportion of stocks and choose not to report all risk related information. Konishi and Ali (2007) confirmed that risk reporting policy is controlled by the board of directors or the top management team, implying that there can be no riskdisclosure without their involvement. In addition, Deumes and Knechel (2008) discovered a negative relationship between internal control disclosures and both ownership concentration and managerial ownership. The authors suggested that this could indicate that there are monetary reasons why corporate managers voluntarily disclose more/less information on internal control and that corporate managers evaluate the disclosure’s costs and advantages then only disclose if the advantages outweigh the costs.
This study compares three models: Pooled OLS, fixed effect (FE) and panel EGLS random effects (RE) to examine the impact of corporate governance characteristics and IFRS7 financial instruments disclosure of 14 listed banks on the Nigerian stock exchange from 2008 to 2012. Empirical evidence suggests that Chi-square and F-statistics in both pooled OLS and FE models are significant thus, not suitable for appraising the model. When the Hausman test was applied to test for the effect, it is found that the null hypothesis of the correlated RE has a significant probability value of 1.0000. This result supports the conclusion that IFRS7 disclosure is related to board committee (BC), board accounting and board financial expertise and the type of gender in boards of the investigated banks in a random fashion. Based on this analysis, the RE model which report significant values on three of the independent variables (BC, 0.0014 and BE, 0.0000) at 1% and (GEN, 0.0056) at 10% level of significance is the model of preference. The findings are germane to executive management, stakeholders and policy makers in banks of developing and emerging markets that have embraced IFRS7 for their financial instruments disclosure. It is recommended that existing regulations in Nigeria on mandatory disclosure should be strengthened to compel listed banks in Nigeria to have at least 15% of women on board because of their positive contribution to disclosure requirements.
You will not be able place or change orders over the weekend, on market holidays or and at other times when the relevant markets are generally closed. There is a substantial risk that non-guaranteed “stop-loss” orders left to protect open positions held during these periods, can be executed at levels significantly worse than their specified price and you will be liable for ‘making good’ any losses, even if they are unforeseen.
Although there is no precise rule or general trend in companies’ reporting behavior, some authors have identified five types of risk relevant to sustainability and sustainability disclosure: strategic, operational, legislative or compliance, reputational, and financial (Ernst & Young, 2011; Brockett and Rezaee, 2012). Sustainability entails strategic risks as, for example, a change in consumer demand towards green products may impose additional investments to create new products. Otherwise, attention to energy saving may generate the opportunity to improve internal efficiency. Operational risks can arise with climate change as it can lead to damage to infrastructure and assets and increased maintenance expenses, which in turn interfere with operations. Sustainability programs sponsored by the governments as well as additional reporting requirements imposed by regulators in relation to environmental issues (e.g. gas emissions) represent a source of compliance risks. Reputational risks derive from increasing external stakeholders’ pressure on company’s CSR practices while financial risks are associated to low sustainability performance (i.e. a low ranks in the Down Jones Sustainability indexes) and scarce external communication about social and environmental issues which lead investors to decrease a company’s value.
In Omnicare, the Supreme Court addressed one of the more complicated areas of securities fraud: statements of opinion and belief in the context of omissions or “half-truths.” An omission is not a statement. It is the absence of a statement or fact, and that absence is one of the key aspects of the Supreme Court’s opinion in Omnicare. Determining when a statement of opinion or belief requires more information or factual clarification so that it is not misleading is important because that omission will then support a claim for securities fraud. For this Article’s purposes, however, the “absence” of the information is also important because it can define the content of the corporate fiduciaries’ duties. That is the issue on which this Article focuses: the interplay between securities and corporate law in the context of the board of directors and its role in the oversight and risk- management decisions that form the bounds for business choices and compliance. Or, put differently, how the decisions of board fiduciaries with respect to the exercise of their duties might be influenced by the need to disclose information about those decisions and choices.
For an EC equal to 5, 7, 8 and 9, one can notice that the curves have a decreasing trend and represent a higher risk aversion – the smallest percentage of the 1-day VaR to report is 83.1%. Also, for most of the time, the curves for the 7th, 8th and 9th exceedance are above 100%, which is due to the proximity to the worst case scenario (reaching 11 exceedances). Nevertheless, there is a curious observation when comparing the series for an EC equal to 5 and 7: in the last 30 days the values are higher in the former. The expectation for this would have been a persistence of higher values for an EC equal to 7. This diﬀerent behavior can be explained with the eﬀect of a future higher multiplier in the scenario where the EC is equal to 7 (3.65) compared with the scenario of an EC equal to 5 (3.4), meaning that the short-term beneﬁts have an higher impact in the agent’s decision – report a lower percentage to increase current savings, instead of a higher percentage to reduce future costs (the damage in the future multiplier is already done).
a. Invoices for Physically Settled Futures Transactions – Notwithstanding any other provision of this Agreement, Exchange will post on Exchange’s Website for sole access by the Contracting Party (or will provide the Contracting Party, upon request, with) an Invoice on or before the 15th day of each calendar month for deliveries and receipts of gas during the prior calendar month pursuant to Physically Settled Futures Transactions, which are payable in the same currency, setting forth a net amount owing by or to the Contracting Party itemizing and applying Set-off to each Purchase Amount payable or receivable in respect of any such Physically Settled Futures Transactions, any amounts payable for fees to Exchange and any amounts payable on account of GST. Exchange will also be entitled to deduct an amount equal to any shortfall in the provision by the Contracting Party of Collateral as at the Physical Settlement Date that has been requested in accordance with the Risk Management Policy and to hold such amount as Collateral until any such shortfall has been rectified to the satisfaction of Exchange. The payment or receipt by the Contracting Party of such net amount in accordance with this Agreement to or from Exchange will constitute full satisfaction of the payment or receipt of any Purchase Amount, payable to or receivable by the Contracting Party and Exchange, subject to Post-Settlement Delivery Adjustments set out in Schedule “J”.