Risk disclosure during the global financial crisis

PurposeThe purpose of this paper is to examine voluntary risk disclosures within annual reports in four key South‐East Asian countries' (Indonesia, Malaysia, Singapore, and Australia) manufacturing listed companies over the Global Financial Crisis (GFC) 2007‐2009 financial years.Design/methodology/approachLongitudinal and cross‐country analyses test the veracity of agency theory to predict the level of firms' risk disclosures. A comprehensive risk disclosure index (RDI) checklist is created with key predictor variables (country, company size, managerial ownership and board independence) tested to explain the dissemination of CSR information over time.FindingsThe findings show that the communication of risk data stays relatively consistent (26‐29 per cent across the three GFC “crisis” years). This is arguably a low level of communication from a social responsibility corporate lens. Multiple regression analysis provides evidence that country, size and board independence are positively significantly associated and leverage is negatively significantly associated with the extent of voluntary risk disclosure. Interestingly, Indonesia, the least developed country with arguably the highest business risk factors, consistently has statistically lower levels of risk disclosure compared with their three neighbours.Research limitations/implicationsThe sample frame is selected from the stock exchange population of manufacturing companies in key South‐East Asian countries. However, for complete generalization the findings should be tested in other countries and other industries.Practical implicationsThe study findings are useful for firm self‐evaluation and benchmarking of risk communication by other corporations across countries.Social implicationsThe study shows relatively low levels of risk disclosure over the GFC crisis time period. Communication of these items are influenced by key firm characteristics and economic drivers. Arguably, higher risk disclosure leads to better understanding of a company's social responsibility stance.Originality/valueThis is a critically important time span to investigate risk disclosures as it encompasses those years most directly impacted by the global financial crisis (GFC).