TY - JOUR
T1 - Do Risk Disclosures Relating to the Use of Financial Instruments Matter? Evidence from the Australian Metals and Mining Sector
AU - Thai, Kevin Huu Phat
AU - Birt, Jacqueline
PY - 2019/12/12
Y1 - 2019/12/12
N2 - This paper investigates the value relevance of risk disclosures relating to the use of financial instruments in the Australian metals and mining sector. The metals and mining sector is the largest sector in Australia by the number of companies and includes several of the world's largest diversified resource producers. Using a manually constructed disclosure index based on AASB 7 Financial Instruments: Disclosures, we find that financial instrument-related risk disclosures provide useful information to equity investors. In terms of individual risk category, liquidity risk is shown to be the most informative risk disclosure. We contribute to a stream of the literature examining the informativeness of risk disclosures. The results of this study have implications for several stakeholders regarding the quality assessment of risk reporting. In addition, the findings are of interest to standard setters since further regulatory changes are under consideration to improve the presentation and disclosure of financial instruments.
AB - This paper investigates the value relevance of risk disclosures relating to the use of financial instruments in the Australian metals and mining sector. The metals and mining sector is the largest sector in Australia by the number of companies and includes several of the world's largest diversified resource producers. Using a manually constructed disclosure index based on AASB 7 Financial Instruments: Disclosures, we find that financial instrument-related risk disclosures provide useful information to equity investors. In terms of individual risk category, liquidity risk is shown to be the most informative risk disclosure. We contribute to a stream of the literature examining the informativeness of risk disclosures. The results of this study have implications for several stakeholders regarding the quality assessment of risk reporting. In addition, the findings are of interest to standard setters since further regulatory changes are under consideration to improve the presentation and disclosure of financial instruments.
KW - AASB 7
KW - disclosure index
KW - Financial instruments
KW - metals and mining
KW - risk disclosure
UR - http://www.scopus.com/inward/record.url?scp=85076715789&partnerID=8YFLogxK
U2 - 10.1142/S1094406019500173
DO - 10.1142/S1094406019500173
M3 - Article
AN - SCOPUS:85076715789
VL - 54
JO - The International Journal of Accounting
JF - The International Journal of Accounting
SN - 0020-7063
IS - 4
M1 - 1950017
ER -