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Are risk management disclosures informative or tautological? evidence from the U.S. banking sector.

Jizi, M. I. and Dixon, R. (2016) 'Are risk management disclosures informative or tautological? evidence from the U.S. banking sector.', Accounting perspectives., 16 (1). pp. 7-30.

Abstract

Banks experienced increasing risk levels during the latest financial crisis. Investors’ confidence was shaken by the effectiveness of bank risk management practices, which has opened new challenges for bank management in approaching its risk. Understanding and communicating adopted risk management mechanisms is likely to provide insights and enable diagnosis on firm risk exposure. Conveying data that reduces information asymmetry might be reflected on stock performance. Investigating the impact of risk management disclosures content on stock price change and return volatility, using a sample of U.S. national commercial banks during 2009–2010, shows that informative risk management disclosures seems to be valued by investors. This is reflected on current-year stock prices and reduces the subsequent-year return variances.

Item Type:Article
Full text:(AM) Accepted Manuscript
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Status:Peer-reviewed
Publisher Web site:https://doi.org/10.1111/1911-3838.12134
Publisher statement:This is the accepted version of the following article: Jizi, M. I. & Dixon, R. (2017). Are Risk Management Disclosures Informative or Tautological? Evidence from the U.S. banking sector. Accounting Perspectives 16(1): 7-30, which has been published in final form at https://doi.org/10.1111/1911-3838.12134. This article may be used for non-commercial purposes in accordance With Wiley Terms and Conditions for self-archiving.
Date accepted:16 March 2016
Date deposited:13 April 2016
Date of first online publication:07 March 2017
Date first made open access:No date available

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