DOI: 10.5176/2251-1997_AF14.26
Authors: Mazurina Mohd Ali, and Dennis Taylor
Abstract:
The aim of this paper is to investigate the nature, extent and types of risk information disclosed, using the context of corporate reporting in Malaysia. Sampling from the 200 top listed companies on Bursa Malaysia’s Main Board, data are hand-collected from annual reports for the year 2009. Content analysis is applied and risk disclosure in annual reports is coded and aggregated according to the number of sentences in which pre-determined risk-related keywords appeared. Risk disclosure sentences are classified according to four sub-categories: operational risk, environmental risk, financial risk and strategic risk. The study finds, in aggregate, financial risk and operational risk disclosures are the highest type of risk disclosure in annual reports. These two types of risks dominate over the other two types of risk disclosures – strategic and environmental risks. These results suggest that there is not a comprehensive scope of risk-related information disclosed by companies in their annual reports. Despite the fact that all categories of risk disclosures could have relevance to investors and other stakeholders, the textual content in annual reports is found to be relatively limited or vague, particularly in risk categories that are not covered by prescriptive regulations. Content analysis procedure employed in this research is limited to only one year observation. The results have implications for investors and market regulators in Malaysia. This study develops a typology and associated definitions that can minimize the ambiguity and maximize the objectivity of measuring the nature and extent of corporate risk disclosure since the literature on approaches to designing a classification typology for corporate risk is unsettled.
Keywords: Malaysia, Risk disclosure, Content analysis
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