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Corporate Risk Disclosure and Corporate Governance
Telfer School of Management, University of Ottawa, 55 Laurier East, Ottawa, Ontario, K1N 6N5, Canada
Published: 31 December 2009
Abstract: To date, research which integrates corporate governance and risk management has been limited. Yet, risk exposure and management are increasingly becoming the core function of modern business enterprises in various sectors and industries domestically and globally. Risk identification and management are crucial in any business strategy design and implementation. From the investors’ point of view, knowledge of the risk profile, risk appetite and risk management are key elements in making sound portfolio investment decisions. This paper examines the relationships between corporate governance mechanisms and risk disclosure behavior using a sample of Canadian publicly-traded companies (TSX 230). Results show that Canadian public companies are more likely to disclose risk management information over and above the mandatory risk disclosures, if they are larger in size and if their boards of directors have more independent members. Minority voting control ownership structures appear to negatively impact risk disclosure and CEO incentive compensation shows mixed results. The paper concludes that more research is needed to further assess the impact of various governance mechanisms on corporate risk management and disclosure behavior.
Keywords: Corporate governance; Enterprise risk management; Agency costs; Fraction of controlling votes; Risk disclosure
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MDPI and ACS Style
Lajili, K. Corporate Risk Disclosure and Corporate Governance. J. Risk Financial Manag. 2009, 2, 94-117.
Lajili K. Corporate Risk Disclosure and Corporate Governance. Journal of Risk and Financial Management. 2009; 2(1):94-117.
Lajili, Kaouthar. 2009. "Corporate Risk Disclosure and Corporate Governance." J. Risk Financial Manag. 2, no. 1: 94-117.