Download Report

NOTTINGHAM BUSINESS SCHOOL PHD SCHOLARSHIP SCHEME 2014
(Entry in MAY 2015)
7 Tuition Fees Funded PhD scholarships available
SCHOOL: BUSINESS
PROJECT TITLE: Risk reporting in developed and emerging markets: theory and evidence
PROJECT LEAD: Professor Paul Klumpes
Project Description
Risk reporting is becoming increasingly important as companies seek to actively mitigate and manage
key risks related financial, operating, strategic and emerging elements affecting the business model’s
integrity and performance. Further there is now greater pressure on corporations to provide greater
accountability on risks that relate to sustainability issues and risks affecting both shareholders and
other key stakeholders and society generally. Regulatory authorities (e.g. the UK’s Financial Reporting
Council (“FRC”) are also now placing more emphasis on the need for companies to provide more
transparency about their overall principal risks, the alignment of management incentives to risk
taking behaviour, corporate risk culture and tolerance, and details about the effectiveness of their risk
management frameworks to assure the future sustainability of their businesses. The newest
requirements by the FRC apply to both shareholder and strategic reporting environments. There are
also implications for accountability in social media networks and other forms of communication by
corporates about their position and performance.
Risk reporting is potentially value relevant to investors and other stakeholders for a number of
reasons. First professional analysts and investors can better understand the sensitivity of reported
firm value and performance numbers to key parameter assumptions that can affect the ability of the
company to achieve its objectives and demonstrate good corporate governance. Credit rating
agencies increasingly monitor the quality of companies’ enterprise risk management systems and
processes. Creditors and government agencies are concerned about the liquidity and credit risks that
may affect the ability of the corporation to survive business and global economic risks. Other
stakeholders are concerned about the social, economic and environmental impact of businesses on
society.
However there is only limited research on risk reporting, the main finding of which is that the extent
of risk reporting is related to firm size. However, most of the existing analysis of risk reporting fails to
delineate the identification of key risks from the effectiveness of risk management systems and
processes, and the role of the board and relevant risk and audit committees in monitoring risk profile.
International differences in risk reporting practices across developed and emerging markets is also of
interest.
The purpose of this project is to examine risk reporting disclosures of companies listed in both
developed and merging markets and identify the nature and extent of current (2013 report and
accounts) disclosures by size and nature of company. To identify the extent to which current risk
disclosures may need to change to meet new requirements being introduced by the FRC with effect
from financial year ends commencing on or after 1 October 2014.
Methodology is likely to involve a combination of quantitative and qualitative research methods. This
would involve firstly an overview of comparing and contrasting current and proposed risk reporting
requirements, both for shareholder-oriented and sustainability reporting, in various international
jurisdictions. An overview of current developments in risk management frameworks, risk culture and
corporate governance issues will also be required. Desk based review of company report and accounts
and recording the extent to which current disclosures meet current and future FRC guidelines and
assessing the elements of risk management best practice which appear to have been adopted by
firms based on their current disclosures. The desk based research will facilitate the development of a
list of risk management practices that companies may deploy and assess the extent to which the risk
disclosures indicate that the practices are in place in each company. Develop a ranking scale to
facilitate between sectors. The disclosure content analysis of accounts is likely to take 1 – 3 hours per
listed company.
Scope of the research may include both Main Market Listing with Market Cap of greater than £10 m.
Sample size likely to be a mix of multinational, medium and small listed companies (e.g. the UK
context, both FTSE 100 companies; 20 FTSE 250 companies; 20 smaller FTSE All Share companies).
Ideally, the sample size sufficient to allow some comparison between sectors as well as by size of
organisation (eg Financial Services vs Industrial etc). This analysis could then be supplemented by
archival data set analysis to identify the main sources and influencers over risk reporting practices
and cross-sectional variations across various developed versus emerging markets.
CONTACT
For informal enquiries about this project, please contact: Professor Paul Klumpes: [email protected]
This project has been selected for consideration for a Business School Scholarship (fees-only) at
Nottingham Trent University for entry in 2015/16. Full details of the projects and the competition are
available at:
http://www.ntu.ac.uk/research/graduate_school/studentships/index.html
For information on entry requirements including English Language, details of the award, and how to
apply, please see the School information sheet.
The closing date for applications is 12.00 noon on 28 November 2014.