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Published byNoah George Modified over 9 years ago
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Communicating risk information: Risk disclosure research Professor Philip Linsley The University of York
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Session outline How we can research risk disclosure Difficulties in researching risk disclosure
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REMEMBER It is argued that: Risk disclosure by companies is poor BUT How do we know this?
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RISK DISCLOSURE STUDIES HAVE OFTEN EXAMINED IF RISK INFORMATION PROVIDED IS: Future or past Quantified or not quantified Good news or bad news
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HOW? Methodology - content analysis
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Financial risk Operations risk HR risk IT risk Integrity risk Strategic risk 123456 Monetary/good news/futureA Monetary/bad news/futureB Monetary/neutral/futureC Non-monetary/good news/futureD Non-monetary/bad news/futureE Nonmonetary/neutral/futureF Monetary/good news/pastG Monetary/bad news/pastH Monetary/neutral/pastI Non-monetary/good news/pastJ Non-monetary/bad news/pastK Non-monetary/neutral/pastL CODING GRID
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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.
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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.
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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
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Beretta and Bozzolan (2004) Examined sample of Italian annual reports QUANTITY OF RISK SENTENCES DOES NOT TELL US ABOUT QUALITY OF RISK DISCLOURES
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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
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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.
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How would you define risk?
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Linsley and Shrives (2006) definition of risk Opportunity, hazard, harm, threat or exposure that has impacted or may impact on the company
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Other problems in risk disclosure studies Cross-country studies Financial versus non-financial firms Longitudinal studies over time
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MOST IMPORTANTLY What is often forgotten is the very nature of risk
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