Reference : Risk disclosure and firm operational efficiency
Scientific journals : Article
Business & economic sciences : Accounting & auditing
Risk disclosure and firm operational efficiency
Derouiche, Imen mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
Manita, riadh mailto [Neoma BS]
Muessig, Anke mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
Annals of Operations Research
Yes (verified by ORBilu)
[en] Risk disclosure ; Data envelopment analysis ; Operational efficiency
[en] This paper examines the effect of risk disclosure on firm operational efficiency using a unique database of nonfinancial, and non-utility French firms belonging to the SBF 120 index over the period 2007–2015. In a first step, we use a data envelopment analysis output-oriented variable returns to scale model to determine firm operational efficiency scores based on one output (i.e., sales revenue) and three inputs (i.e., net property, plant, and equipment; cost of goods sold; and selling, general, and administrative costs). These scores are used in a second step to estimate the effect of risk disclosure on operational efficiency after controlling for a set of other factors. The empirical results show a statistically significant positive relation between risk disclosure and operational efficiency, suggesting that firms tend to be relatively more efficient when they disclose more about their risk exposure. Overall, we provide evidence that firms with greater risk disclosure are seen by stakeholders as more credible and trustworthy, leading them to conduct better transactions and, consequently, to improve their operational efficiency. This result is consistent with the notion that stakeholders perceive transparent firms positively, particularly those revealing bad news.
University of Luxembourg: Department of Economics and Management
Fonds National de la Recherche - FnR
Researchers ; Professionals ; Students ; General public ; Others
FnR ; FNR8363110 > Anke Müßig > RISK > The Simultaneous Relation between Accounting Conservatism and Risk Reporting and Their Joint Effect on Analysts’ Forecast Accuracy > 01/07/2016 > 30/06/2019 > 2014

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