Company risk-related disclosures in a code law country

Abstract

This paper provides a historical overview of the contemporary regulatory environment relating to risk-related disclosures, highlights major factors influencing contemporary risk reporting practices by companies, and engages in a reflective overview of four recently published papers on aspects of corporate risk-related disclosures in a code law country, Portugal. Main findings indicate that risk-related disclosures are inadequate, lack transparency, and compound the difficulty of assessing the risk profile of a company. Recent regulation initiatives have been of dubious effectiveness in improving the quality of risk information disclosed. Portuguese companies are found to disclose risk-related information principally to reduce agency costs and to enhance corporate reputation. The overview provided suggests that enhanced corporate accountability would ensue if further disclosures of relevant risk-related information were mandated. One mechanism to do so would be regulations recommended by the International Integrated Reporting Committee (IIRC).