Corporate risk disclosures: Influence of institutional shareholders and audit committee

Abstract

This study investigates the association between corporate risk disclosures and institutional shareholders and audit committees. Using a sample of 66 Australian listed companies, risk disclosures made in 2009 annual reports are analysed. Findings reveal that there is no significant relationship between dedicated-type institutional block shareholders and risk disclosure, which it is argued is consistent with a proprietary information perspective. A positive relationship however is found between transient-type institutional block shareholders and risk disclosures. This result is consistent with a principal that wields limited monitoring resources while achieving high resource dependency over management. Significant positive relationships are found between audit committee independence and risk disclosures.