Risk disclosure and company valuation: Moderating effect of regulation

Fangfang Li, Yuan Yao, Pu Lu and Yan Li

Finance Research Letters, 2025, vol. 82, issue C

Abstract: This study analyzes the relationship between risk disclosure and company valuation and moderating effects of external regulatory evaluation and audit quality on this relationship. Using data from a sample of Chinese A-share listed companies, we find that risk disclosure is negatively related to company valuation, with higher quality external regulation evaluation and external oversight mitigating this negative correlation. Further analysis reveals that companies with higher risk disclosure tend to experience poorer financial performance and cash flow. Our study suggests that risk disclosure serves as a description of existing risks, lacking a warning function for investors.

Keywords: Risk disclosure; Company valuation; External regulation evaluation; Audit quality; Annual report (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:82:y:2025:i:c:s1544612325008955

DOI: 10.1016/j.frl.2025.107636

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