ABSTRACT
The growing volatility of markets as of the 1970’s raised great interest in financial risks. However, global risk management has hardly been addressed at the present time. That has been a concern on the part of capital markets regulatory agencies as well, Fasb and SEC in particular, which have set forth specific regulations for the disclosure of information on financial and non-financial risks as a way to improve market disclosure.
The purpose of this paper is to assess the disclosure level of financial and non-financial risks information as addressed by the 20-F accounting statements of Telecommunications companies in the year 2000 and 2001. The ongoing disclosure of such information is a contribution for market effectiveness as defined by Fama (1970)FAMA, E. Efficient capital markets: a review of theory and empirical work. The Journal of Finance, New York, v. 25, p. 383-417, 1970..
The present study is predominantly exploratory, based on documental analysis methodology, and involves the reading of accounting statements of selected companies, risk factors classification after Jorion (2000)JORION, P. Value at risk - The new benchmark for managing financial risk. 2. ed. New York: MacGraw-Hill, 2000., and data analysis based on risk factors according to information level classification, which is to say risk evidence level, particularly the impacts that are likely to affect the future of business.
Although partial, the assumptions found in this article may lead to some reflection on financial and non-financial disclosure quality differences, as well as to a discussion on the cultural and strategic aspects that lead business administrators to distinctive decisions when faced with disclosure of risk factors, in addition to the relevance of risk disclosure as contributor for market effectiveness.
KEYWORDS
Disclosure; Risk factors; Market effectiveness; Volatility
Thumbnail
