Journal of Operational Risk

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Risk disclosures in annual reports: the role of nonfinancial companies listed on the Athens stock exchange

Fragiskos Gonidakis, Andreas G. Koutoupis, Panagiotis Kyriakogkonas and Grigorios Lazos

  • The identification and management of risks protects businesses and creates value to the shareholders and all interested parties.
  • The failure of the organizations is attributed to the inability of the senior management and the inadequacy of their Board of Directors to identify and inform, in a timely manner, the problems and risks they faced.
  • The number of disclosed risks is constantly increasing through the years that are under examination in this research, which possibly implies a shift in the mindset of companies toward a risk-based approach.
  • Risk management as part of corporate governance is one of the key elements that possess a significant role for the investment decisions of institutional shareholders.

In recent years, risk has become one of the most important business issues. The aim of this paper is to analyze the obligations of all companies listed on the Athens stock exchange, not only to identify and manage business risks but also to inform investors regarding those risks. The identification and management of risks protects businesses and adds value to the shareholders and all interested parties. During previous years many organizations collapsed due to irregularities and fraud. Many stakeholders, such as shareholders, creditors, suppliers, customers, employees and governments, were adversely affected. The failure of these organizations was attributed to the inability of senior management and the inadequacy of their boards of directors to identify and inform the problems and risks that they faced in a timely manner. The effectiveness of management contributes to sound corporate-governance practices. This study analyzes the risks disclosed by all nonfinancial companies listed on the Athens stock exchange by undertaking content analysis of their annual reports during the period 2005–11.

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