Risk disclosures are among the most important types of non-financial information valued by investors. Risk disclosures are mostly narrative, proprietary in nature and, consequently, the importance of their accuracy and assurance is high to prevent them becoming boiler-plate and lose their relevance. By exploiting the unique features of a setting in which risk disclosure is mandatory and under a positive assurance requirement, we investigate whether the quality of audited risk disclosures is associated with the type of audit firm (Big-4 vs. non-Big-4), the characteristics of the audit firm and the attributes of the audit partner. Our results show an association between risk disclosure quality and auditors, but not in the ways that one would have expected. After the enforcement of a regulation that requires a detailed description of risks in the Operating and Financial Review (OFR) and a positive assurance of external audit over these disclosures, we do not document any significant Big-4 effect. The quality of risk disclosures is associated with the attributes of the audit partner, namely familiarity with different client risk disclosures, expertise and gender, independently from her belonging to a Big-4 audit firm. Along this way, we extend the recent evidence on the audit partner effects in the assurance of non-financial narrative information.

The quality of mandatory non-financial (risk) disclosures: the moderating role of audit firm and partner characteristics / Bozzolan, S.; Miihkinen, A.. - In: INTERNATIONAL JOURNAL OF ACCOUNTING. - ISSN 1094-4060. - 56:2(2021), pp. 2150008 -1-2150008 -55. [10.1142/S1094406021500086]

The quality of mandatory non-financial (risk) disclosures: the moderating role of audit firm and partner characteristics

Bozzolan S.
;
2021

Abstract

Risk disclosures are among the most important types of non-financial information valued by investors. Risk disclosures are mostly narrative, proprietary in nature and, consequently, the importance of their accuracy and assurance is high to prevent them becoming boiler-plate and lose their relevance. By exploiting the unique features of a setting in which risk disclosure is mandatory and under a positive assurance requirement, we investigate whether the quality of audited risk disclosures is associated with the type of audit firm (Big-4 vs. non-Big-4), the characteristics of the audit firm and the attributes of the audit partner. Our results show an association between risk disclosure quality and auditors, but not in the ways that one would have expected. After the enforcement of a regulation that requires a detailed description of risks in the Operating and Financial Review (OFR) and a positive assurance of external audit over these disclosures, we do not document any significant Big-4 effect. The quality of risk disclosures is associated with the attributes of the audit partner, namely familiarity with different client risk disclosures, expertise and gender, independently from her belonging to a Big-4 audit firm. Along this way, we extend the recent evidence on the audit partner effects in the assurance of non-financial narrative information.
Non-financial information; Risk disclosure; Positive Assurance, Audit partner characteristics
The quality of mandatory non-financial (risk) disclosures: the moderating role of audit firm and partner characteristics / Bozzolan, S.; Miihkinen, A.. - In: INTERNATIONAL JOURNAL OF ACCOUNTING. - ISSN 1094-4060. - 56:2(2021), pp. 2150008 -1-2150008 -55. [10.1142/S1094406021500086]
File in questo prodotto:
File Dimensione Formato  
s1094406021500086.pdf

Open Access

Tipologia: Versione dell'editore
Licenza: Tutti i diritti riservati
Dimensione 323.83 kB
Formato Adobe PDF
323.83 kB Adobe PDF Visualizza/Apri
Pubblicazioni consigliate

Caricamento pubblicazioni consigliate

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11385/192837
Citazioni
  • Scopus 3
  • ???jsp.display-item.citation.isi??? 2
social impact