The interaction between mandatory and voluntary risk disclosure: A comparative study

Recently, risk reporting has received considerable attention from regulators and empirical researchers. However the interaction between mandatory and voluntary disclosure has received limited attention to date, with no prior study investigating this relationship in relation to risk disclosure. The paper investigates the interaction between mandatory and voluntary risk disclosure by demonstrating if a complementary (substitution) effect of mandatory vs. voluntary disclosure exists in the annual reports of five countries characterised by different regulatory regimes (France, Germany, Italy, UK and US). The results show that a complementary effect is confirmed when there is the prominent presence of risk guidelines (risk rules) in France and UK (Germany, Italy and US). The results generally supports the influence of some firm-specific characteristics on the interaction between mandatory and voluntary disclosure, as proved by an association with size, leveraged firms, and performance-related variables.