Article (Scientific journals)
Risk disclosure and firm operational efficiency
Derouiche, Imen; Manita, riadh; Muessig, Anke
2021In Annals of Operations Research, 297, p. 115–145
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Keywords :
Risk disclosure; Data envelopment analysis; Operational efficiency
Abstract :
[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.
Research center :
University of Luxembourg: Department of Economics and Management
Disciplines :
Accounting & auditing
Author, co-author :
Derouiche, Imen ;  University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA)
Manita, riadh;  Neoma BS
Muessig, Anke ;  University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA)
External co-authors :
yes
Language :
English
Title :
Risk disclosure and firm operational efficiency
Publication date :
2021
Journal title :
Annals of Operations Research
ISSN :
1572-9338
Publisher :
Springer, Norwell, United States - Massachusetts
Volume :
297
Pages :
115–145
Peer reviewed :
Peer Reviewed verified by ORBi
FnR Project :
FNR8363110 - The Simultaneous Relation Between Accounting Conservatism And Risk Reporting And Their Joint Effect On Analysts' Forecast Accuracy, 2014 (01/07/2016-30/06/2019) - Anke Müßig
Funders :
FNR - Fonds National de la Recherche [LU]
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