The value relevance of risk disclosure in annual reports: Evidence from MENA emerging markets

Néjia Moumen, Hakim Ben Othman and Khaled Hussainey ()

Research in International Business and Finance, 2015, vol. 34, issue C, 177-204

Abstract: Our paper aims to examine whether voluntary risk disclosure in the annual report contains value-relevant information for investors to predict future earnings. We used a large-scale sample firms from MENA emerging markets. Our sample includes 809 year-observations for the 3-year period, 2007–2009. Our study offers two significant contributions. First, we found a positive relationship between voluntary risk information and the market's ability to anticipate 2-years ahead future earnings change. The positive association provides us with the first empirical evidence of the usefulness of risk disclosure in annual reports. Second, we found that the level of proprietary costs tends to moderate the perceived relevance of risk information, thereby making investors rely on another source of information in forecasting future earnings change.

Keywords: Risk disclosure; Value relevance; Future earnings; Proprietary costs; MENA emerging markets (search for similar items in EconPapers)
JEL-codes: G15 G17 G32 M41 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:34:y:2015:i:c:p:177-204

DOI: 10.1016/j.ribaf.2015.02.004

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