The paper “ Risk Reporting - a Study of Risk Disclosures in the Annual Reports of UK Companies by Linsley et al” is a valuable example of a finance & accounting article. The article is based on the aspect of risk management by providing an analysis of firms that have been affected by this issue. The article is related to the literature gap in the reporting practices that firms employ when they want to report financial risks. Moreover, the article strives to highlight the relationship between environmental risk and risk disclosures. Another issue discussed in the paper is the nature of risk disclosures by examining whether a risk disclosure can be regarded as either good or bad.
From the article, it is evident that there is a gap in the available information about risks as a result of which there might be challenges in evaluating the level of risk in an organization (Linsley and Shrives 2006, p. 387). The research problem in the article is to ascertain whether there is a relationship between the risk disclosures that companies make in their annual reports and the sizes of the companies.
Moreover, the study strives to answer the question of whether the risk disclosures are equivalent to the number of risks that the company may experience throughout the year. The problem is studied in the research also relates to monetary and non-monetary risk disclosures. The study attempts to ascertain whether companies are motivated to report these two types of risks. In answering the research question, the study attempts to uncover the differences between bad and good risks in an organization and their impact on the performance of the firm.
In the United Kingdom, the issue of risk disclosures has dominated debates about the performance of firms. In this regard, the authors of the article strive to portray the relationship between the two aspects and how they affect organizational growth (Ahmed and Courtis 1999, p. 36). The article can be regarded as interesting since it has looked at the issue from various dimensions. For example, the article has focused on the level of risk and its relationship with the firm size, as well as the risk disclosure for both monetary and non-monetary risks within an organization.
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