Risk Information Practices in Annual Reports: An Indo-German Collaborative Comparison
Journal Title: MUDRA: Journal of Finance and Accounting - Year 2018, Vol 5, Issue 1
Abstract
This paper looks at the information given on risks as disclosed in Indian and German annual reports. Such annual reports are a method for overcoming the information asymmetry between investors and managers by gaining information on the performance and the associated risks of listed companies. They can also be of valuable for analysts and managers as a reference for their own reporting and (financial) analysis. We therefore analysed the annual reports of the companies in the Indian SENSEX index and compared them with the companies included in the German DAX index keeping in mind the regulatory framework of their operations. This was done with the help of an evaluation scheme, acting as a guideline for the qualitative content analysis. With disclosure requirements oscillating between mandatory and voluntary, we found that while companies of both indices comply with the mandatory requirements, information on voluntary basis, especially on numerical concrete risk reporting, can be improved, more so in the Indian context. Also, some companies in both economies have shown the way in comprehensively categorizing risk related information which can be adopted, where possible, by other companies in their respective indices. Overall, we found that (1) companies issue only few information on concrete risks, (2) the difference in information quality between the two samples is statistically significant, and (3) size and leverage can explain part of the variance within the samples.
Authors and Affiliations
Thomas Berger, Pankaj Trivedi, Sunil Parmar
Keywords
Related Articles
- EP ID EP625211
- DOI 10.17492/mudra.v5i01.13032
- Views 186
- Downloads 0
Customer Relationship Management Practices and Customer Loyalty in Commercial Banks: An Empirical Study
Differentiating products through best practices, providing timely services to encourage word of mouth publicity, and increasing quality of services through best practices have become benchmarks in retail banking sector i...
Fundamental Research Analysis of Real Estate Sector: A Case Study of IRB Infrastructure and Developers Ltd.
Fundamental analysis is true to its name in being a fundamental research tool to explore the potential of a particular industry or company which can be very helpful in making investment decision. It can also be used to f...
Green Finance: A Step towards Sustainable Development
In present times of technological progress the worldwide economy is undermined from three major challenges: environmental change, vitality limitations and money related emergency. This is on account of financial improvem...
Association of Discretionary Accruals and Big 4 Client Firms: Evidence from India
This paper examines whether discretionary accruals of the company are related with the auditing done by Big 4 auditors of the company. This paper analysed empirically all the listed companies in Bombay Stock Exchange ava...
Seasonality in the Indian Stock Markets: A Study of Calendar Effects
Theoretical and technological advances in Behavioural Finance over the last decades seem to have shifted the paradigm away from the Efficient Market Hypothesis proposed by Fama in 1970s. The hypothesis implied that secu...