The informativeness assessment of risk and risk management disclosure in corporate reporting: An empirical analysis of Italian large listed firms

This paper aims to contribute to the ongoing debate about the effects of new Italian Legislative Decree No. 254 of December 30, 2016 on firms’ disclosure behavior by investigating 1) the interaction relationship among Risk or Risk Management (RRM), Industry, Type of Risk, and Level of Specific Disclosure; 2) the variation of specific level of disclosing risk-related information across the industries and types of risk; 3) and the different behavior between risk and risk management disclosure in the aftermath of the regulation’s issuance. The research is based on a sample of large undertakings and groups which are subjected to the Legislative Decree. Two phases of content analysis were executed to analyze the risk and risk management disclosure. The research questions were investigated by row effects log-linear model. Our result shows that there are interaction relationships among RRM, Type of Risk, Industry, and Level of Specific Disclosure. Companies provide risk-related information in different levels of specificity depending on whether the information is risk description or risk management, the firms are operating in manufacturing or non-manufacturing, and the type of risk which the firms disclosed in their reports. This research could be useful for policymakers who have to decide to what extent disclosure requirements should be detailed and, instead, what room should be left for management discretion, in respect to users’ needs. This paper is an up-to-date assessment of the Italian firms’ compliance to the Legislative Decree No. 254 of December 30, 2016.