This study examined the nature of risk disclosures within UK annual reports for FTSE 100 non-financial companies and tested for relationships between the volume of risk disclosures and company size and company risk level. A summary of the outcomes of the hypothesis testing is contained within Table 6. The results support the hypothesis that a positive correlation exists between the volume of risk disclosures and company size. This confirms Beretta and Bozzolan’s (2004) findings for Italian companies’ risk disclosures and reflects the findings of general disclosure studies (for example Cooke, 1992).
A correlation was found between the volume of risk disclosures and the level of company risk for just two of the seven measures of risk. There was no correlation noted for the risk measures of gearing ratio, asset cover,book to market value of equity, beta factor or quiscore. The two environmental measures of risk, the BiE Index and the EcoValue‘21TM Rating Model, both displayed positive correlations with the number of risk
disclosures. The use of the BiE Index to test for a risk disclosure–risk level correlation is contentious however, as the BiE Index measures environmental engagement and it is not possible to know if environmental engagement can be considered a proxy for environmental risk.
This study examined the nature of risk disclosures within UK annual reports for FTSE 100 non-financial companies and tested for relationships between the volume of risk disclosures and company size and company risk level. A summary of the outcomes of the hypothesis testing is contained within Table 6. The results support the hypothesis that a positive correlation exists between the volume of risk disclosures and company size. This confirms Beretta and Bozzolan’s (2004) findings for Italian companies’ risk disclosures and reflects the findings of general disclosure studies (for example Cooke, 1992).A correlation was found between the volume of risk disclosures and the level of company risk for just two of the seven measures of risk. There was no correlation noted for the risk measures of gearing ratio, asset cover,book to market value of equity, beta factor or quiscore. The two environmental measures of risk, the BiE Index and the EcoValue‘21TM Rating Model, both displayed positive correlations with the number of riskdisclosures. The use of the BiE Index to test for a risk disclosure–risk level correlation is contentious however, as the BiE Index measures environmental engagement and it is not possible to know if environmental engagement can be considered a proxy for environmental risk.
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