FIRM CHARACTERISTICS AND FORWARD-LOOKING RISK DISCLOSURE: EVIDENCE FROM THE ITALIAN CONTEXT

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Abstract

This paper aims to examine the relationship between firm determinants and forward-looking risk disclosure in the Italian context. In particular, analysing a sample of non-financial Italian listed companies, we ran a regression model to investigate the influence of preminent firms’ characteristics (independent variable) on the forward-looking risk disclosure (dependent variable). Findings highlight that firm size and independent directors are positively related to forward-looking risk information; on the contrary, other firms’ features are not statistically relevant. The results obtained suggest that, in the examined context, large sized companies are inclined to disclose forward-looking estimation to reduce asymmetry information and to attract potential investors. Moreover, larger firms are more likely to disclose additional information because they can bear more easily the cost of future projections and extended disclosure than the smallest companies. This study adds empirical findings to the accounting literature and it could be helpful to regulators and policy makers, in order to enhance information quality and to increase transparency in the annual report as well.

Keywords: Firm Characteristics, Forward-Looking Risk Disclosure, Content Analysis, Italian Non-Financial Listed Companies

Authors’ individual contribution: Conceptualization – M.R., M.T., C.F., and A.N.; Methodology - C.F. and A.N.; Validation - M.R. and M.T.; Resources - A.N.; Writing – C.F. and A.N.; Supervision – M.R. and M.T.

Acknowledgement: Published with a contribution from 5 x 1000 IRPEF funds in favour of the University of Foggia, in memory of Gianluca Montel.

JEL Classification: G32, M40, M48

Received: 29.04.2019
Accepted: 12.07.2019
Published online: 15.07.2019

How to cite this paper: Romano M., Taliento M., Favino C., & Netti A. (2019). Firm characteristics and forward-looking risk disclosure: Evidence from the Italian context. Corporate Ownership & Control, 16(4), 56-65. https://doi.org/10.22495/cocv16i4art5