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

Author

Listed:
  • Wael Louhichi

    (ESSCA School of Management)

  • Ousayna Zreik

    (CREM Rennes)

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.

Suggested Citation

  • Wael Louhichi & Ousayna Zreik, 2015. "Corporate Risk Reporting: A study of The Impact of Risk Disclosure on Firms Reputation," Economics Bulletin, AccessEcon, vol. 35(4), pages 2395-2408.
    • Handle: RePEc:ebl:ecbull:eb-15-00374
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    References listed on IDEAS

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    More about this item

    Keywords

    Firm reputation; risk disclosure; Panel regression;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • G1 - Financial Economics - - General Financial Markets

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