[en] We analyse the relation between systematic risk disclosure, which is the description of a company’s exposure to systematic risk factors and its influence on investors’ risk perception for a sample of UK listed firms from 2017 to 2015. Our results show that investors react to the systematic component of risk exposure description in the annual report; the information is incorporate into the capital market. For annual reports of financial years ending in 2013 or after, the relation between systematic risk disclosure and investors’ risk perception is negative compared to a positive relation for the annual reports ending before 2013. The mandatory strategic report introduced in 2013, in which firms are required to describe their risk exposure, seems to foster more timely description of risks and uncertainties. Therefore, firms tend to solely update the risk information in their annual reports in subsequent years and thus they resolve known risk factors rather than introducing new ones.
Accounting & auditing
Author, co-author :
Weber, Véronique ; University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA)
Muessig, Anke ; University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA)