Abstract
This research focuses on the importance of ownership structure as a determinant of risk disclosure. It is expected to contribute to the literature particularly in the Malaysian context, where risk disclosure practice is in the infancy stage. This study uses multiple regressions in assessing the variability of the extent of risk disclosure. The overall results confirm that highly concentrated ownership would lead to high agency problem, which then leads to less disclosure. This implies that, to promote greater transparency in countries where many of the large listed companies are family-owned, more stringent laws that mandates adequate risk disclosure is clearly warranted. This would ensure that the needs of all stakeholders are properly met
Highlights
Prompted in great measure by the exponential growth in information and communication technology and rapid change in global markets, coupled with shifting demographics and the homogenization of personal and organizational values, there has been an increased demand for information on risks by the stakeholders of firms
Risk disclosure has become an integral part of good corporate governance and such information is expected to be increasingly sought by the firm‘s stakeholders and other users
An annual report has 20 sentences devoted to the discussion of risk
Summary
Prompted in great measure by the exponential growth in information and communication technology and rapid change in global markets, coupled with shifting demographics and the homogenization of personal and organizational values, there has been an increased demand for information on risks by the stakeholders of firms. Firms today are pressured to report on risks to enable the stakeholders to quickly recognize, react and adapt to changing global catalysts. Information on how adept a company is in comprehending and managing threats and related risks, enables the stakeholders to assess the ability of top managers and other employees to manage risks successfully and pursue business opportunities (Korosec and Horvat, 2005). Risk disclosure has become an integral part of good corporate governance and such information is expected to be increasingly sought by the firm‘s stakeholders and other users. With more similar cases appearing, researchers are motivated to study and examine risk reporting in a more global context (e.g., IFAC, 1999; Kajuter, 2001; Shrives & Linsley, 2003)
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