‘What can we understand from the firms’ accounts about the risks they are exposed to and how they manage them? A comparison is made between firms in five different industries for the year 2008’

Gregoriou, Ioanna (2009) ‘What can we understand from the firms’ accounts about the risks they are exposed to and how they manage them? A comparison is made between firms in five different industries for the year 2008’. [Dissertation (University of Nottingham only)] (Unpublished)

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Abstract

The purpose of this paper is to examine the risk disclosures of UK companies. An analysis of fifteen companies belonging to the FTSE 100 has been conducted for the financial year 2008, in order to provide insight into the relationship between the quantity and quality of risk disclosures and specific corporate characteristics such as size and gearing. Risks have been classified under four main headings, these being financial, operational, strategic, and information processing and technology risks. This paper serves another role which is to examine potential differences in risks disclosed by companies belonging to different industries. The industries that are compared are the tobacco, retail, food and beverages, oil and gas and airline industries. This study also deals with an examination of whether highly geared companies disclose some sort of monetary information under the Key Group Risk Factors section, in order to make information regarding the company’s financial situation clear and transparent to the users of Annual Reports.

Results regarding the relationship between the quantity and quality of risk disclosures with company size indicate that larger companies seem to disclose more risks and also have better quality risk disclosures than other smaller companies in size, which may be consistent with signalling theory. However, results regarding the relationship between the quantity of risk disclosures with gearing are mixed. Results indicate that on average high geared firms do not disclose more risks than low geared companies, but do however use more pages in the Annual Reports to explain their key risks. It also seems that highly geared firms do not on average have better quality of risk disclosures, with the exception of British Airways whose quality of risk disclosures has been classified as being very good. Results further show that highly geared firms disclose some sort of monetary information to make information more transparent and it also seems that companies of different industries tend to disclose more of a particular risk than others in order to reflect the industry’s own particular risks. I conclude that since empirical evidence on risk disclosures is limited, I suggest that more empirical work is conducted in this area.

Item Type: Dissertation (University of Nottingham only)
Depositing User: EP, Services
Date Deposited: 04 Feb 2010 10:30
Last Modified: 29 Sep 2016 15:39
URI: http://eprints.nottingham.ac.uk/id/eprint/23030

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