communicating risk information: risk disclosure research professor philip linsley the university of...
TRANSCRIPT
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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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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