On 4 May at 12:00, there will be an OSA seminar by Chiara Crovini, AAU, entitled:

“Does it pay to be transparent? The role of the business model in the market valuation of risk reporting”

Abstract
Risk reporting is an essential means of providing investors with information about the risks that a company faces. The EU Directive 95/2014 and the UK Companies Act require large companies to state their main risks in their annual reports. While only minimum disclosure requirements are defined, the regulations now require companies to contextualize the risks by linking them to their business model (BM). Currently, no studies have investigated the level of integration of BM reporting and risk reporting and the consequences of such integration. To fill this gap, the annual reports of a sample of UK listed companies over four years are examined. Risk disclosure indexes are built to capture the quality of risk information. The analyses indicate that risk information is value relevant when related to and integrated with BM reporting. Investors negatively price risk disclosure because most of the risk descriptions have a negative connotation. The BM can be used as a tool to identify and interpret the most relevant risks of a given company. Despite their negative association with market values, the risks related to the BM are associated with reduced information asymmetry. As this is the first study on the effects of integrating mandatory BM reporting and risk reporting, the results are valuable to various stakeholders, including academics, standard setters, and professional bodies. The policy implications of the study suggest developing guidelines that clarify which definitions of BM and risk should be adopted and how these two sections of the annual report should be integrated.

Everyone is welcome!

NB: Chiara will be available for a few 1:1 research talks around the time of her seminar on 4 May. If you are interested, please let Stefan Schaper know before Thursday 28 April.