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Risk Disclosure and Firm Value: Evidence from the United Kingdom

100%

Tache M.

Central European Economic Journal

2021

vol. 8

issue 55

The International Accounting Standard Board (IASB) aimed to increase the decision usefulness of firms’ risk disclosures with the 2007 introduction of the International Financial Reporting Standards (IFRS) 7. Specifically, listed firms were mandated to provide information to the market on both their (1) exposure and (2) risk management, which are associated with holding their financial instruments. This study investigates whether IFRS 7 financial instruments and their disclosures are associated with firm valuation. Using data on premiumlisted United Kingdom (UK) companies, for the period 2007–2019, I find evidence that firm value (proxied by Tobin's Q) is negatively associated with the quantity of IFRS 7 interest and credit risk disclosures. I further find that the market value decreases with the presence of quantitative information tabulated in the disclosures. The findings of this study have important implications for the IASB's standard-setting process.

Disclosure of risk information in the European banking sector

51%

Klepczarek E.

Ekonomia Międzynarodowa

2016

issue 16

350-366

Doświadczenia globalnego kryzysu finansowego sprawiły, że debata nad zakresem informacji ujawnianych przez banki nabrała szczególnego znaczenia. Odpowiednia ilość danych trafiających do domeny publicznej warunkuje bowiem przejrzystość sektora bankowego optymalizującą decyzje uczestników rynku. Jednocześnie na globalnym rynku finansowym obserwuje się tendencję do ujednolicania standardów rachunkowości, aby zakres ujawnianych informacji był taki sam. Celem przedstawionych w artykule badań jest zweryfikowanie istnienia różnic, jeśli chodzi o ilość ujawnianych informacji wymaganych standardami GAAP i IFRS, oraz zbadanie, czy bardziej stabilne sektory bankowe mają tendencję do ujawniania większego zakresu danych. Wskazanie czynników determinujących poziom ujawnień wydaje się istotne dla wypracowania procedur poprawiających przejrzystość i stabilność rynków finansowych.

A debate on the scope of bank information disclosures seems to be essential, especially after the Global Financial Crisis. The adequate quantity of data provided to the public domain is a condition of transparency of the banking sector which should assure the optimization of market participants’ decisions. There is also a tendency to unify global accountancy standards, and they are expected to ensure the same scope of disclosed information for the global financial market. The aim of the study is to investigate if there are any differences with the number of risk disclosures among the banks using GAAP and IFRS accounting standards, and if more stable banking sectors tend to report a wider scope of data. Finding out the nature of the determinants of disclosures is an important aspect in terms of working out the procedures which will increase the transparency and stability of the financial markets.

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1 Central European Economic Journal

1 Ekonomia Międzynarodowa

1 Klepczarek E.

1 Tache M.

1 2021

1 2016

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Risk Disclosure and Firm Value: Evidence from the United Kingdom

Disclosure of risk information in the European banking sector