Country-specific risks and geographic disclosure aggregation: Voluntary disclosure behaviour by British multinationals |
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| Institution: | 1. School of Accounting, UNSW Business School, UNSW Sydney, 2052 Australia;2. Discipline of International Business, Business School, The University of Sydney, NSW, 2006, Australia;1. Department of Economics “Marco Biagi”, University of Modena and Reggio Emilia, Viale Berengario 51, 41121, Modena, Italy;2. Essex Business School, University of Essex, Colchester, CO4 3 SQ, UK;3. Department of Economics and Statistics, University of Udine, Via Tomadini 30A, 33100, Udine, Italy;1. School of Accounting, RMIT University, Melbourne, Victoria, Australia;2. Cardiff Business School, Colum Drive, Cardiff, CF10 3EU, United Kingdom;3. Research Professor in Accounting, Adam Smith School of Business, The University of Glasgow, Scotland, United Kingdom;1. School of Management, Royal Holloway, University of London, Egham Hill, Egham, TW200EX, UK;2. Department of Business and Law, University of Siena, P.zza San Francesco 7/8, 53100, Siena, Italy;1. Bangor Business School, University of Bangor, Bangor, Gwynedd, LL57 2DG, UK;2. Hull University Business School, University of Hull, Hull, HU6 7RX, UK |
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| Abstract: | Country-by-country reporting can promote accountability and corporate transparency by highlighting the activities of multinational firms in different countries. We examine the voluntary disclosure behaviour of leading British multinational firms in respect of country-specific risks. Specifically, we consider whether British multinationals' engagement in geographic disclosure aggregation/disaggregation of their country-by-country operations is associated with the country-specific business, economic, and political risks faced by their principal operating subsidiaries. We study the information disclosed in two key sections of corporate annual reports: segment information, and principal uncertainties and risks. Our findings show that British multinationals are less likely to voluntarily report their segment and risk information on a disaggregated geographic country-by-country basis if they are engaged in operations in countries associated with higher levels of country-specific risks. Country-specific risk disclosures are an important case, consistent with voluntary disclosure theory, where costs tend to outweigh benefits from the perspective of what is perceived to be in a multinational firm's best interests. |
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| Keywords: | Country-by-country reporting Country-specific risks Voluntary disclosure Segment reporting Risk disclosures |
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