Firm determinants of risk disclosure: Evidence from Italian listed companies

The purpose of the paper is to investigate the relationship between firm characteristics and risk disclosure in the Italian context. Analysing a sample of 183 non-financial Italian listed companies, a regression model was run to examine the influence of some firm determinants, such as size, industry, board of directors independence, ownership structure and leverage (independent variables), on the extent of risk disclosure measured through an index based on the information disclosed in annual report (dependent variable). In particular, from the methodology standpoint, both the bivariate (Pearson correlations) and the multivariate (OLS regression model) statistics have been used, while content analysis was carried out to find the useful information to build the risk index. Findings show a positive relationship between firm size and the extent of risk disclosure. Contrarily, there is no statistically significant evidence between information provided by Italian companies regarding their risks and the other firm determinants. The results suggest that, in the Italian context, despite the recent interventions from the legislator to improve risk disclosure in corporate reporting, there is a remarkable difference between the disclosure provided by large and small sized companies. The findings could be conducive for regulators and policy-makers, in order to enhance risk disclosure practices and to enhance transparency in the annual report.