Corporate Risk Reporting: A study of The Impact of Risk Disclosure on Firms Reputation

Wael Louhichi () and Ousayna Zreik ()
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Wael Louhichi: ESSCA School of Management
Ousayna Zreik: CREM Rennes

Economics Bulletin, 2015, vol. 35, issue 4, 2395-2408

Abstract: In this paper, we explore the influence of the communication about potential risk within annual reports on firm reputation. We use the content analysis to measure the risk reporting; and we consider the Most Admired Companies list published in Fortune magazine as a proxy for reputation. Our findings highlight that risk reporting affects positively compagny reputation. We check the robustness of these results for alternative empirical models (pooled OLS, fixed effects, and random effects) and, in addition, for alternative measurement of reputation. Our results provide support to legitimacy theory, as the disclosure of risk's information is a part of a social contract that should be rewarded with good reputation. Furthermore, we examine the behavior of risk reporting for high and low-risk firms. We show that risk disclosure behavior is sensitive to level of risk.

Keywords: Firm reputation; risk disclosure; Panel regression (search for similar items in EconPapers)
JEL-codes: G1 G3 (search for similar items in EconPapers)
Date: 2015-11-20
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Citations: View citations in EconPapers (1)

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