Board composition and voluntary risk disclosure during uncertainty

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Adelopo, I., Yekini, K., Maina, R. and Wang, Y. ORCID: 0000-0001-5438-4255, 2021. Board composition and voluntary risk disclosure during uncertainty. The International Journal of Accounting. ISSN 1094-4060

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Official URL: https://doi.org/10.1142/S1094406021500050

Abstract

This study examines the relationship between board composition and voluntary risk disclosure during uncertainty for a sample of UK listed companies. A strand of the disclosure literature focusing on the impact of the board on corporate disclosure argues that board composition influences the extent and quality of corporate disclosure, but they have largely used data from stable periods and rarely on risk disclosure. Instead, using agency theory, we examine the impact of board composition on risk disclosure during corporate uncertainty for a sample of UK listed companies for the period 2006-2015. We used content analysis to derive our measure of risk disclosure and measure board composition based on its size, independence, meeting frequency and gender diversity. Our regression analyses controlled for the extent of firms’ agency costs, firm risk level and the impact of mandatory risk disclosure regulation amongst other control variables. Consistent with our hypotheses, we find that board size and board independence are positively associated with firms’ risk disclosure during uncertainty but board meeting frequency and gender diversity seem inconsequential for risk disclosure. Firms’ risk disclosure is positively associated with risk level and mandatory risk disclosure. Our results are robust to alternative model specifications and endogeneity concerns. We highlight the implications of our findings for management practice and regulations.

Item Type:

Journal article

Publication Title:

The International Journal of Accounting

Creators:

Adelopo, I., Yekini, K., Maina, R. and Wang, Y.

Publisher:

World Scientific Publishing

Date:

26 April 2021

ISSN:

1094-4060