communicating risk information: risk disclosure research professor philip linsley the university of...
TRANSCRIPT
Communicating risk information:
Risk disclosure research
Professor Philip Linsley
The University of York
Session outline
• How we can research risk disclosure
• Difficulties in researching risk disclosure
REMEMBER
It is argued that:
Risk disclosure by companies is poor
BUT
How do we know this?
RISK DISCLOSURE STUDIES HAVE OFTEN EXAMINED IF RISK INFORMATION PROVIDED IS:
Future or past
Quantified or not quantified
Good news or bad news
HOW?
Methodology - content analysis
CODING GRID
How would you code this risk sentence from the Marks & Spencer plc financial report?
In recent times, as customers are spending less
when they shop and people are moving house less
often, customers have increasingly turned to
Marks & Spencer for homeware purchases.
How would you code this risk sentence from the Marks & Spencer plc financial report?
Our competitive prices reassure our customers
that they can economise at Marks & Spencer
without compromising on quality.
Linsley and Shrives (2006)
Examined sample of UK annual reports
• 6,168 risk sentences
• Most were not quantified
• More good news than bad news
• More future than past
Beretta and Bozzolan (2004)
Examined sample of Italian annual reports
QUANTITY OF RISK SENTENCES
DOES NOT TELL US ABOUT
QUALITY OF RISK DISCLOURES
Can we ever measure quality of risk disclosures?
• Different stakeholders = different needs
• Different readers = different risk attitudes
• Different industries = different risks and different approaches to risk
How would you code this risk sentence from the Marks & Spencer plc financial report?
Our business philosophy is that our products
should always be made with the very best
ingredients.
How would you define risk?
Linsley and Shrives (2006) definition of risk
Opportunity, hazard, harm, threat or exposure that
has impacted or may impact on the company
Other problems in risk disclosure studies
• Cross-country studies
• Financial versus non-financial firms
• Longitudinal studies over time
MOST IMPORTANTLY
What is often forgotten is the very nature of risk