Disclosure Of Risk Information Research Articles

Reporting Corporate Risk: An Empirical Inquiry into Listed Entities in the Saudi Capital Market

A capital market with greater transparency provides more accurate metrics for measuring corporate performance, which can be utilized to inform market participants’ decisions. Informed risk is crucial to corporate reporting transparency. This empirical study explores the extent to which firms in the Saudi capital market disclose risk information, whether financial or non-financial. A risk disclosure index (RDI) is constructed based on a rigorous literature review of previous studies, considering suggested items related to corporate risk that must be disclosed. The sample comprises 50 corporations, with five companies representing the energy sector, three representing the utility sector, and forty-two representing the materials sector. The findings reveal moderate financial risk disclosure (sample mean 56%) and low non-financial risk disclosure (sample mean 33%) in the Saudi capital market. In the energy sector, the disclosed financial and non-financial risks comprise 57% and 37%, respectively; in the utility sector, these proportions are 56% and 31%, while in the materials sector, they are 54% and 33%, respectively. Regulators should prioritize high-quality, transparent, and comparable risk information disclosure to attract direct foreign investment. To improve their risk disclosure, managers of firms can also employ the RDI to examine the extent of risk their companies face. This study is limited to the annual and board reports of companies in the three sectors.

The Gaps Between Institutional and Practical Disaster Risk Management Measures on Coastal Flood Risks in South Korea’s Coastal Communities

Global warming and climate change significantly increase the frequency of coastal floods caused by sea level rise (SLR) as a permanent factor and hydrometeorological hazards as tentative factors. The combined risks will affect coastal communities. South Korea is gradually facing SLR risks, mainly in its southern coastal regions; however, disaster risk reduction (DRR) in coastal regions remains fragmented. This study aimed to investigate the status of DRR for coastal communities in South Korea by looking at government practices and testimonies from residents. This study reviewed DRR-related regulations and documents and collected data from interviews with local government officials, field visits, and informal conversations with residents in six coastal communities. The findings show that the coastal communities were less resilient to coastal floods than to other hazards, such as typhoons and heavy rains, and the potential consequences could be expanded due to demographic challenges, fragmented institutional systems, and low risk awareness. Moreover, this study emphasized the necessity of an integrated approach to reducing the impact of coastal floods caused by both SLR and other factors. It also highlighted the importance of coastal community engagement in local DRR activities through increasing risk awareness and adapting to environmental change based on appropriate risk information disclosure by the government. The impacts of coastal floods triggered by SLR and other hazard factors can be reduced by aligning practical regulatory measures with adaptive strategies and enhancing the disaster resilience of coastal communities.

Heterogeneous risk disclosure and earnings management motivation: evidence from China’s IPO market

Purpose Heterogeneous risk disclosure has been proven to improve the efficiency of new stock issuance, but excessive risk disclosure during the IPO may lead to irrational underestimation of the company, which is different from the original intention of management's detailed disclosure. Therefore, this study aims to examine the impact of IPO heterogeneous risk disclosure on earnings management motivations from the information transfer perspective of earnings management. Design/methodology/approach The sample includes 2,000 listed companies listed firms on Shanghai and Shenzhen Stock Exchanges from 2007 to 2022. This study uses the pretrained ERNIE model to measure text similarity in the prospectus to measure the heterogeneity of IPO risk disclosure. Findings This study empirically finds that heterogeneous IPO risk disclosure suppresses the opportunistic motivation of earnings management because managers tend to use earnings management to leverage information transmission functions. Such an effect is more pronounced in firms with higher analyst attention, lower marketization levels and non-state-owned. And heterogeneous risk disclosure may inhibit management’s over-investment behavior, thereby reducing the possibility of management engaging in opportunistic earnings management. Besides, price discounts are used to distinguish opportunistic and non-opportunistic earnings management and carry out a quasi-natural experimental design to demonstrate that marketization can enhance the relationship between heterogeneous risk disclosure and earnings management. Originality/value This study contributes evidence regarding the economic consequences of managerial earnings management behavior related to heterogeneous IPO risk disclosure. It supports highlighted firms in the IPO risk information disclosure to mitigate potential adverse outcomes through earnings management. This contributes to the literature and enhances information transparency in the capital market, fostering the healthy development of China’s capital market.

DETERMINANTS OF RISK DISCLOSURE IN TOP-PERFORMING AUTOMOBILE COMPANIES IN INDIA

Considering the business environment, operations, and regulatory environment companies operate in, disclosure requirements per the regulatory authorities have been more stringent. This study examined the degree of disclosure of risk information disclosed by companies established in India in the automobile sector listed on the National Stock Exchange (NSE) and listed international companies with unlisted subsidiaries in India. This study also aims to identify the governance attributes that influenced the practice of risk disclosure among the selected companies in India. The main risks in top-performing automobile companies in India have disclosed are examined in this paper, along with the board characteristics associated with the disclosure of corporate risk information. The variables included in the study are board size, board independence, and ownership concentration. The content analysis approach was adopted to determine the degree of risk disclosure practices. This study has also applied the descriptive statistics method and fixed effect analysis to measure the degree of information disclosure and to elaborate on the interrelationship between disclosure practices in India and governance attributes. Assessing India's top-performing automobile companies eventually unraveled the risk disclosure practices. Agency and signalling theories were adopted in this study to elucidate the company disclosure practice. The study reveals that there is a significant positive association between board size and the extent of risk disclosure; a significant positive association between board independence and the extent of risk disclosure; and a significant negative association between ownership concentration and the extent of risk disclosure.

How hereditary cancer risk disclosure to relatives is handled in practice – Patient perspectives from a Swedish cancer genetics clinic

ObjectivesHereditary cancer risks can be effectively managed if at-risk relatives enroll in surveillance and preventive care. Family-mediated risk disclosure has internationally been shown to be incomplete, selective and leave over a third of eligible at-risk individuals without access to genetic counseling. We explored patients handling of cancer risk information in practice. MethodsWe conducted twelve semi-structured interviews with patients who had completed their genetic counseling and been asked to disclose risk information to relatives. Questions were designed to investigate lived experiences of communicating hereditary risk and focused on disclosure strategies, intrafamilial interactions and emotional responses. ResultsQualitative content analysis yielded five categories. These span personal fears, shared responsibilities, feeling of empowerment, innovative solutions and unmet needs. Patients put high value on collaboration with their genetic healthcare professionals but also solicited better overview of the counseling process and more personalized, case-tailored information. ConclusionsOur results add novel insights about the practical strategies employed by genetic counselees and their motivations behind disclosing hereditary risk information to relatives. Practice implicationsA patient-centered cancer genetics care would clarify roles and responsibilities around risk disclosure, inform counselees about the process upfront and tailor information to offer case-specific data with the family’s inheritance pattern explained.

PDPHE: Personal Data Protection for Trans-Border Transmission Based on Homomorphic Encryption

In the digital age, data transmission has become a key component of globalization and international cooperation. However, it faces several challenges in protecting the privacy and security of data, such as the risk of information disclosure on third-party platforms. Moreover, there are few solutions for personal data protection in cross-border transmission scenarios due to the difficulty of handling sensitive information between different countries and regions. In this paper, we propose an approach, personal data protection based on homomorphic encryption (PDPHE), to creatively apply the privacy computing technology homomorphic encryption (HE) to cross-border personal data protection. Specifically, PDPHE reconstructs the classical full homomorphic encryption (FHE) algorithm, DGHV, by adding support for multi-bit encryption and security level classification to ensure consistency with current data protection regulations. Then, PDPHE applies the reconstructed algorithm to the novel cross-border data protection scenario. To evaluate PDPHE in actual cross-border data transfer scenarios, we construct a prototype model based on PDPHE and manually construct a data corpus called PDPBench. Our evaluation results on PDPBench demonstrate that PDPHE cannot only effectively solve privacy protection issues in cross-border data transmission but also promote international data exchange and cooperation, bringing significant improvements for personal data protection during cross-border data sharing.

Differentially Private Consensus for Second-Order Multiagent Systems With Quantized Communication.

This article considers the differentially private consensus problem of discrete-time second-order multiagent systems with partially measurable states and limited communication channel capacity, where only the integer-value information of agents can be transmitted. To reduce the potential risk of state information disclosure in digital communication, a differentially private consensus algorithm via dynamic encoding-decoding is proposed for the second-order multiagent system to make agents achieve mean-square consensus by transmitting quantized integer values with privacy protection. To deal with the uncertainty of the quantizer saturation, the statistical analysis is given for the boundedness of the input of quantizers. It is shown that the expectation of the minimum memory capacity of quantizers is 2 bits. Finally, some simulation results are given to visualize our conclusions.

Delegation of management authority and the level of corporate risk disclosure

This study reveals that delegating more power to management tends to decrease corporate risk information disclosure. The detrimental effects of this power delegation are especially significant in companies within less marketized regions and those distanced from regulatory supervision. These findings highlight the critical role of external regulators in cultivating a robust market and legal framework. Such an environment is key to developing effective corporate charter systems that can restrain management's self-interest and ensure more transparent risk disclosure.

Global Financial Crisis: Unravelling Corporate Governance Failures

The global financial crisis of 2007-2008, stemming from the United States subprime mortgage crisis, was a profound and widespread calamity with far-reaching implications for economies, enterprises, and investors worldwide. This essay posits that the root cause of this crisis lies in the failure of corporate governance, asserting that the outbreak unfolded through three stages: the accumulation, amplification, and outbreak of governance risks. Crucially, the first stage reveals a convergence of internal and external governance failures, marking the conjunction of internal governance lapses—specifically in risk management, executive compensation, board operations, and information disclosure—and external governance deficiencies in government regulation, legal requirements, and social accountability. The multifaceted impact of the crisis, leading to the bankruptcy of prominent financial institutions globally and unprecedented government interventions, underscored the urgency of addressing governance issues. Scholars and researchers globally have since dissected the crisis, identifying lessons and recommending reforms. This essay examines the intricate balance between internal and external governance, emphasizing the imperative of effective interaction. Proposals for improvement include enhancing board structures, implementing substantive disclosure rules, fortifying government regulation, and fostering international cooperation. The aftermath of the crisis, while posing challenges, also presents an opportunity for corporate governance reform. The lessons learned highlight the indispensability of robust governance mechanisms in protecting investor and shareholder interests. Effectively navigating the evolving landscape requires staying abreast of contemporary needs and embracing reforms that align with the dynamic nature of global finance. Ultimately, the financial crisis underscores the pivotal role of effective corporate governance in mitigating risks, fostering sustainable development, and safeguarding societal interests.

A blind signature scheme for IoV based on 2D-SCML image encryption and lattice cipher

Today’s Internet of Vehicles (IoV) faces many security risks in the data transmission process, and image data is more vulnerable to security threats in the transmission process due to its special characteristics such as large amounts of information and high visibility. Therefore, to guarantee the dependability of data transmission in the IoV environment, this paper designs a blind signature scheme for IoV based on two-dimensional sine cosine cross-chaotic mapping (2D-SCML) image encryption and lattice cipher (BSS-IoV). The innovation of this scheme is that it aims at blind signature of image information, blinds it before sending the information, and combines the lattice public key encryption algorithm to better ensure the safe and reliable transmission of information and reduce the risk of information disclosure. To further ensure the security of the scheme, an image encryption algorithm based on 2D-SCML and pixel splitting (2PS-IEA) is proposed, which is used to blind the information and thus reduce the risk of information leakage on the one hand, on the other hand, it is used in the signature process to ensure the security of the signed information. The 2D-SCML is derived from the cross-model structure proposed in this paper. Through simulation results and experimental analysis, the values of NPCR and UACI, respectively, 99.6094% and 33.4635%, are close to ideal values. And 50% of the cut image can also recover the rough information, which indicates that the signature scheme has the security against differential attacks, cut attacks and noise attacks. Moreover, the security analysis shows that the scheme has the anti-tamper, anti-repudiation and traceability.

Climate Risk and Capital Structure

We use firm-level data that measure forward-looking physical climate risk to examine the impact of climate risk on capital structure. We find that greater physical climate risk leads to lower leverage in the post-2015 period (i.e., after the Paris Agreement and the first step of standardization of disclosure of climate risk information). Our results hold after controlling for firm characteristics known to determine leverage, including credit ratings. Our evidence shows that the reduction in leverage related to climate risk is shared between a demand effect (the firm’s optimal leverage decreases) and a supply effect (bankers and bondholders increase spreads when lending to firms with the greatest risk). Our results are consistent with the hypothesis that physical climate risk affects leverage via larger expected distress costs and higher operating costs. This paper was accepted by Colin Mayer, Special Section of Management Science on Business and Climate Change. Funding: This project benefited from the financial support of the Institut Europlace de Finance (Grant EIF 2019). Q. Moreau acknowledges financial support from the French Association of Institutional Investors. The authors have received in-kind support from Carbone 4 for this project in the form of a data set of climate risk ratings. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2023.4952 .

Derivative Risk Information Disclosure Effect on Financial Reporting Quality Evidence from Selected Listed Deposit Money Banks in Nigeria

This study investigates the impact of financial derivative risk information disclosure on the quality of financial reporting in a sample of Nigerian deposit money banks. Data from the annual financial reports of twelve Nigerian listed commercial banks were collected over a ten-year period, from 2012 to 2021. While derivative assets served as the proxy for the independent variable, Jones Discretionary Accrual was employed to measure reporting quality and cash flow to asset ratio was employed as control variable. The hypothesis was tested using Pooled Ordinary Least Square regression analysis technique whose result indicate that disclosure of financial derivative risk information leads to an increase in discretionary accrual value, thereby undermining the quality of financial reports. As a result of this finding, the study concludes that disclosing financial derivative risk information has a negative impact on the quality of financial reports issued by Nigerian deposit money banks. It therefore recommends that policymakers work with regulatory bodies and standard-setting organizations to establish standardized disclosure practices for derivative instruments among Nigerian deposit money banks.

Is voluntary risk disclosure informative? The role of UK firm-level governance

PurposeThe study investigates how firm-level governance (FL_G) affects the disclosure of voluntary risk information. Likewise, it explores the influence of FL_G on the informativeness of voluntary risk disclosure (VRD). Specifically, it examines how FL_G shapes the nexus between VRD and firm value.Design/methodology/approachIt uses a sample of non-financial firms from the FTSE350 index listed on the London Stock Exchange between 2010 and 2018. The authors utilise an automated textual analysis technique to code the VRD in the annual reports of these firms. The firm value, adjusted for the industry median, is a proxy for investor response to VRD.FindingsThe results suggest that UK firms with significant board independence and larger audit committees disclose more risk information voluntarily. Nevertheless, firms with larger boards of directors and higher managerial ownership disseminate less voluntary risk information. Besides, VRD contains relevant information that enhances investors' valuation of UK firms. These results are more pronounced in firms with higher independent directors, lower managerial ownership and large audit committees.Practical implicationsThe study rationalises the ongoing debate on the effect of FL_G on VRD. The findings are helpful to UK policy-setters in reconsidering the guidelines that regulate UK VRD and to the UK investors in considering risk disclosure in their price decisions and thus enhancing their corporate valuations.Originality/valueIt contributes to the risk reporting literature in the UK by presenting the first evidence on the effect of a comprehensive set of FL_G on VRD. Besides, it enriches the existing research by shedding light on the role of FL_G on the informativeness of discretionary risk information in the UK.

Customer Concentration and Information Transparency: Evidence From China

Information transparency plays a vital role for developing capital markets. Using data of A-share listed companies from 2007 to 2020, this study examined the impact of customer concentration on corporate information transparency from a supply chain perspective. It suggests that a significant negative correlation exists between customer concentration and information transparency. Customer concentration affects the quality of corporate information disclosures. Through the mechanism test, the impact of customer concentration on corporate information transparency is based on the risk effect rather than the substitution effect of private information on public information. Research on regulatory effects points out that a poor internal information environment aggravates the negative relationship between customer concentration and information transparency. However, media supervision and a higher marketization process alleviate the adverse effects of customer concentration on information transparency. This study indicates that firms with a higher customer concentration have a higher risk of information disclosure, which provides a reference point for investors for making investment-related decisions and for the capital market supervision department for formulating information disclosure policies.

The Impact of Climate Information Disclosure on Audit Fees: A Study Based on Principal Component Analysis

To investigate the influence of corporate climate information disclosure on audit fees, this study examines the period from 2012 to 2021, focusing on companies listed on the Shanghai and Shenzhen stock exchanges. The research is based on the quasi-natural experiment of the ESG rating disclosure event by SynTao Green Finance in 2015. Firstly, using principal component analysis and a multi-period difference-in-differences model, the study determines the impact of climate information disclosure on audit fees. Robustness tests are conducted using trimming procedures and placebo experiments, which confirm the initial findings. Secondly, building on the previous analysis, the study explores the interaction effects of analyst forecast deviation and the presence of the Big Four audit firms on the relationship between ESG ratings and audit fees. Finally, the research concludes that the disclosure of climate risk information reduces audit fees by mitigating information risk and operational risk for companies. Moreover, this negative impact of climate risk disclosure on audit fees is more pronounced when analyst forecasts are more accurate or when the auditing firm belongs to the "Big Four" group.

Market reaction to climate risk report disclosures: The roles of investor attention and sentiment

Considering volitional disclosure of climate risk information, a question is whether investors react negatively to climate risk reports as highlighting new risks, or, alternatively, investors reward firm transparency initiatives. We evidence that enterprises that actively disclose climate risk information, such as emission reduction targets, are either rewarded or ignored by the market, consistent with our latter explanation. Results are consistent with disclosing of climate risk information signaling trustworthiness to investors. Further, closer analysis reveals our identified reactions are positively conditioned by the firm being state-owned; being a focus of greater investor attention, and being the recipient of negative investor sentiment.

Survey on Privacy-Preserving Techniques for Microdata Publication

The exponential growth of collected, processed, and shared microdata has given rise to concerns about individuals’ privacy. As a result, laws and regulations have emerged to control what organisations do with microdata and how they protect it. Statistical Disclosure Control seeks to reduce the risk of confidential information disclosure by de-identifying them. Such de-identification is guaranteed through privacy-preserving techniques (PPTs). However, de-identified data usually results in loss of information, with a possible impact on data analysis precision and model predictive performance. The main goal is to protect the individual’s privacy while maintaining the interpretability of the data (i.e., its usefulness). Statistical Disclosure Control is an area that is expanding and needs to be explored since there is still no solution that guarantees optimal privacy and utility. This survey focuses on all steps of the de-identification process. We present existing PPTs used in microdata de-identification, privacy measures suitable for several disclosure types, and information loss and predictive performance measures. In this survey, we discuss the main challenges raised by privacy constraints, describe the main approaches to handle these obstacles, review the taxonomies of PPTs, provide a theoretical analysis of existing comparative studies, and raise multiple open issues.

Risk disclosure in sustainability reports: Empirical evidence from the energy sector

Recently, companies in the energy sector have faced multiple financial and environmental risks. This finding demonstrates the need for energy companies to disclose risk information. However, academic attention on risk disclosure (RD) remains limited. Through manual content analysis and a regression model, this study examines the effect of the features of the board of directors and audit committee on the RD level in sustainability reports. The empirical findings reveal that the size and independence of the board of directors and the size of the audit committee positively affect the RD level.

Smart mobile tourism app featuring augmented reality and big data analytics: an empirical analysis using UTAUT2 and PCT models

Purpose Considering the limited understanding of determinants influencing the adoption of smart mobile tourism app (SMTA) featuring augmented reality (AR) and big data analytics (BDA), privacy concern (PC) and the risk of privacy information disclosure (PI) have threatened SMTA adoption. This study aims to propose an expanded consumer acceptance and use of information technology (UTAUT2) model by including new contextual components, integrated with privacy calculus theory (PCT) model to examine the determinants influencing behavioural intention (BI) to use SMTA. Design/methodology/approach Personal innovativeness (IN) and privacy information disclosure (PI) are incorporated in UTAUT2 model to determine its effect on SMTA featuring AR and BDA technologies from smart perspective. Both privacy concern (PC) and privacy risk (PR) derived from PCT model are also included to determine its influences on an individual's willingness to disclose privacy information for better-personalised services. We collected responses from 392 targeted participants, resulting in a strong response rate of 84.66%. These responses were analysed statistically using structural equation modeling in both SPSS 22.0 and SmartPLS 3.0. Findings Findings showed that personal innovativeness (IN), habit (HT) and performance expectancy (PE) significantly affect behavioural intention (BI) while privacy concern (PC) significantly affect privacy information disclosure (PI) to use SMTA. In contrast, effort expectancy (EE), hedonic motivation (HM) and privacy information disclosure (PI) had no significant effects on behavioural intention (BI) while privacy risk (PR) had no significant effects on privacy information disclosure (PI) to use SMTA. Originality/value The study findings help tourism practitioners in better comprehending recent trends of SMTA adoption for establishing targeted marketing strategies on apps to improve service quality. In addition, it enables app development companies acquire app users’ preferences to enhance their app development for leading app usage.

KETERDEDAHAN INFORMASI BENCANA DAN KESIAPSIAPAGAAN MASYARAKAT MENGHADAPI BENCANA BANJIR ROB DI KABUPATEN ACEH BARAT

The research objective is to analyze the influence of individual characteristics and disclosure of disaster risk information on community preparedness in facing coastal floods. The methodology used is explanatory research with a quantitative approach. In this study, a questionnaire was used with the number of samples were 82 respondents who were in the desa Pasir, Kec. Johan Pahlawan, Kab.Aceh Barat. The results of this study indicate that the individual characteristics of gender, age, and final education have a significant effect on community preparedness to face coastal flooding, but are classified as quite weak. Meanwhile, the disclosure of disaster risk information, namely the intensity of media use, the frequency of media use, and the quality of information has a significant effect on community preparedness to face coastal flooding, and is classified as strong.