Country-specific risks and geographic disclosure aggregation: Voluntary disclosure behaviour by British multinationals. Issue 3 (April 2019)

• Record Type: Journal Article
• Authors: Kang, Helen; Gray, Sidney J.
• Is Part Of: British accounting review. Volume 51:Issue 3(2019)
• Page Start: 259
• Page End: 276
• Publication Date: 2019-04
• Subjects: Country-by-country reporting -- Country-specific risks -- Voluntary disclosure -- Segment reporting -- Risk disclosures; Accounting -- Periodicals; Accounting -- Great Britain -- Periodicals; Comptabilité -- Périodiques; Comptabilité -- Grande-Bretagne -- Périodiques; 657.05
• DOI: 10.1016/j.bar.2019.02.001
• Languages: English
• ISSNs: 0890-8389

Abstract

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.