NOTTINGHAM BUSINESS SCHOOL PHD SCHOLARSHIP SCHEME 2014 (Entry in MAY 2015) 7 Tuition Fees Funded PhD scholarships available SCHOOL: BUSINESS PROJECT TITLE: Risk reporting in developed and emerging markets: theory and evidence PROJECT LEAD: Professor Paul Klumpes Project Description Risk reporting is becoming increasingly important as companies seek to actively mitigate and manage key risks related financial, operating, strategic and emerging elements affecting the business model’s integrity and performance. Further there is now greater pressure on corporations to provide greater accountability on risks that relate to sustainability issues and risks affecting both shareholders and other key stakeholders and society generally. Regulatory authorities (e.g. the UK’s Financial Reporting Council (“FRC”) are also now placing more emphasis on the need for companies to provide more transparency about their overall principal risks, the alignment of management incentives to risk taking behaviour, corporate risk culture and tolerance, and details about the effectiveness of their risk management frameworks to assure the future sustainability of their businesses. The newest requirements by the FRC apply to both shareholder and strategic reporting environments. There are also implications for accountability in social media networks and other forms of communication by corporates about their position and performance. Risk reporting is potentially value relevant to investors and other stakeholders for a number of reasons. First professional analysts and investors can better understand the sensitivity of reported firm value and performance numbers to key parameter assumptions that can affect the ability of the company to achieve its objectives and demonstrate good corporate governance. Credit rating agencies increasingly monitor the quality of companies’ enterprise risk management systems and processes. Creditors and government agencies are concerned about the liquidity and credit risks that may affect the ability of the corporation to survive business and global economic risks. Other stakeholders are concerned about the social, economic and environmental impact of businesses on society. However there is only limited research on risk reporting, the main finding of which is that the extent of risk reporting is related to firm size. However, most of the existing analysis of risk reporting fails to delineate the identification of key risks from the effectiveness of risk management systems and processes, and the role of the board and relevant risk and audit committees in monitoring risk profile. International differences in risk reporting practices across developed and emerging markets is also of interest. The purpose of this project is to examine risk reporting disclosures of companies listed in both developed and merging markets and identify the nature and extent of current (2013 report and accounts) disclosures by size and nature of company. To identify the extent to which current risk disclosures may need to change to meet new requirements being introduced by the FRC with effect from financial year ends commencing on or after 1 October 2014. Methodology is likely to involve a combination of quantitative and qualitative research methods. This would involve firstly an overview of comparing and contrasting current and proposed risk reporting requirements, both for shareholder-oriented and sustainability reporting, in various international jurisdictions. An overview of current developments in risk management frameworks, risk culture and corporate governance issues will also be required. Desk based review of company report and accounts and recording the extent to which current disclosures meet current and future FRC guidelines and assessing the elements of risk management best practice which appear to have been adopted by firms based on their current disclosures. The desk based research will facilitate the development of a list of risk management practices that companies may deploy and assess the extent to which the risk disclosures indicate that the practices are in place in each company. Develop a ranking scale to facilitate between sectors. The disclosure content analysis of accounts is likely to take 1 – 3 hours per listed company. Scope of the research may include both Main Market Listing with Market Cap of greater than £10 m. Sample size likely to be a mix of multinational, medium and small listed companies (e.g. the UK context, both FTSE 100 companies; 20 FTSE 250 companies; 20 smaller FTSE All Share companies). Ideally, the sample size sufficient to allow some comparison between sectors as well as by size of organisation (eg Financial Services vs Industrial etc). This analysis could then be supplemented by archival data set analysis to identify the main sources and influencers over risk reporting practices and cross-sectional variations across various developed versus emerging markets. CONTACT For informal enquiries about this project, please contact: Professor Paul Klumpes: [email protected] This project has been selected for consideration for a Business School Scholarship (fees-only) at Nottingham Trent University for entry in 2015/16. Full details of the projects and the competition are available at: http://www.ntu.ac.uk/research/graduate_school/studentships/index.html For information on entry requirements including English Language, details of the award, and how to apply, please see the School information sheet. The closing date for applications is 12.00 noon on 28 November 2014.
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