Managerial Ownership, Modification of Business Risk Disclosure and Investors Risk Perception: Evidence from Japan

Peijun Liu (vincentlpj.ou@gmail.com)
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Peijun Liu: Graduate School of Economics, Osaka University

No 24-11, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: This paper investigates the association between ownership structure with business risk disclosure in Japan, and the relationship between information content of risk disclosure and investors' risk perception. In the sample of Japanese firms over the period 2014-2021, the main results indicate a significant and nonmonotonic relationship between managerial ownership and annual modification in business risk disclosure. In particular, the modification of business risk disclosure decreases as managerial ownership increases for both high and low levels of management share holdings, while it increases for intermediate levels of it. In addition, I find that the annual increase in business risk disclosure is negatively associated with changes in daily stock return volatility and trading volume, suggesting a greater opinion convergence among investors after the release of business risk disclosure. This study contributes to existing literature in support of the nonboilerplate argument and informativeness of risk disclosure.

Keywords: Managerial Ownership; Business Risk Disclosure; Narrative Financial Disclosure; Information Content; Market Reactions (search for similar items in EconPapers)
JEL-codes: M41 M48 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2024-10
New Economics Papers: this item is included in nep-acc, nep-cfn and nep-rmg
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