Determinants of financial instruments risk disclosure: An empirical analysis in the banking sector

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Alessandra Allini ORCID logo, Luca Ferri ORCID logo, Marco Maffei ORCID logo, Annamaria Zampella ORCID logo


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This study investigates the effects of firm and country factors, considered as determinants of the financial instruments risk disclosure (FIRD) proxied by IFRS 7 in the European banking system. We select 582 banks-year observations based on the largest five European economies (France, Germany, Italy, Spain and the UK) as provided by the International Monetary Fund (IMF). Our analysis covers a period of 8 years (2007-2014) and adopts an OLS model. Results show that both firm (the type of auditor, board size and profitability) and country factors (financing environment, regulatory environment, and organizational status) affect FIRD. Limitations for this paper could relate to country selection, as well as on the breadth of the sample. Nevertheless, these aspects could unveil possible areas of future inquiry. The contribution of the study is twofold. It enriches the literature about firm and country determinants on financial instruments risk disclosure, as combined rather than single-standing variables. Yet, it draws the attention of banks’ management and investors on what the crucial factors to reach an optimal level of FIRD are and gain the confidence of capital markets, reducing information asymmetries. This is the first empirical investigation on the determinants of FIRD, using IFRS 7, in the European banking sector that adopts firm and country factors in a combined effort.

Keywords: Determinants, Risk Disclosure, IFRS 7, Banks

Authors’ individual contribution: Conceptualization – A.Z.; Methodology – L.F., A.Z.; Writing – A.A., L.F., M.M., A.Z.; Investigation – L.F., A.Z.; Supervision – A.A., M.M.

JEL Classification: M41

Received: 29.10.2019
Accepted: 03.01.2020
Published online: 14.01.2020

How to cite this paper: Allini, A., Ferri, L., Maffei, M., & Zampella, A. (2020). Determinants of financial instruments risk disclosure: An empirical analysis in the banking sector. Corporate Ownership & Control, 17(2), 20-31.