• Register
  • Login
  • Persian

Financial Accounting Knowledge

  1. Home
  2. The Mediator Role of Risk Management in the Relationship between Business Strategy and Tone of Risk Disclosure

Current Issue

By Issue

By Author

By Subject

Author Index

Keyword Index

About Journal

Aims and Scope

Editorial Board

Publication Ethics

Indexing and Abstracting

Related Links

FAQ

Peer Review Process

Journal Metrics

News

Guide for Authors

Terms and Conditions

Forms

The Mediator Role of Risk Management in the Relationship between Business Strategy and Tone of Risk Disclosure

    Authors

    • Amirhossein Azimianmoez 1
    • Abbas Aflatooni 2
    • Hassan Zalaghi 2

    1 Ph.D. Student, Department of Accounting, Faculty of Economics and Social Sciences, Bu-Ali Sina University, Hamedan

    2 Associate Professor , Department of Accounting, Faculty of Economics and Social Sciences, Bu-Ali Sina University, Hamedan

,

Document Type : Research Paper

10.30479/jfak.2023.18320.3063
  • Article Information
  • References
  • Download
  • How to cite
  • Statistics
  • Share

Abstract

Purpose: The main objective of this research is to determine the impact of risk management on the relationship between business strategy and firm’s risk disclosure.
Method: The research hypotheses were tested based on combined data and using multiple regression models. In addition, the mediation effect was assessed using the Sobel test. The period of this study is from 2015 to 2020, during which time exaggerated data from 126 companies were examined.
Conclusion: The results of this study show that the type of business strategy has a direct impact on the risk management framework of firms listed on the Tehran Stock Exchange. Thus, defensive business strategy leads to stronger risk management than offensive business strategy which creates weaker risk management. Even though business strategy does not have a direct impact on corporate disclosure, organizational risk management as a mediating variable leads firms with a defensive approach to adopt a more negative tone and firms with an offensive approach to adopt a more positive tone.
Result: Although the type of firm's business strategy does not directly influence the tone of risk disclosure, risk management as a mediator variable causes the extent of firm risk appetite, or in other words its business strategy, to have an inverse relationship with the tone of risk disclosure.
Contribution: The literature review in the field of risk disclosure shows that there is no study that addresses the management factors including business strategy and risk management that have an invisible influence on the tone of risk disclosure. Therefore, this study aims to develop the literature in this area to help researchers and legislators in the capital market field to explain new policies and laws, and to help shareholders in the capital market to make predictions and assessments when relying on the tone of risk disclosure.

Keywords

  • Business Strategy
  • Offensive Strategy
  • Defensive Strategy
  • Risk Management
  • Tone of Risk Disclosure

Main Subjects

  • Financial Accounting
  • XML
  • PDF 1.54 M
  • RIS
  • EndNote
  • Mendeley
  • BibTeX
  • APA
  • MLA
  • HARVARD
  • CHICAGO
  • VANCOUVER
References
Abraham, S., & Shrives, P. J. (2014). Improving the relevance of risk factor disclosure in corporate annual reports. The British Accounting Review, 46(1): 91-107.
Almasri, B. (2021). The role of enterprise risk management on disclosure transparency in the international financial reporting standards period. Accounting, 7: 1241-1250
Bakhshinejad, M. (2020). The effect of information transfer on the impact of abnormal returns on business strategy of companies listed in Tehran Stock Exchange. Journal of Financial Accounting Research, 4(42): 1-22.  (in Persian)
Beasley, M.S., Pagach, D., & Warr, R. (2008). Information conveyed in hiring announcements of senior executives overseeing enterprise-wide risk management processes. Journal of Accounting, Auditing and Finance, 23 (3): 311–332.
Ben-Amar, W., Boujenoui, A., & Zéghal, D. (2014). The Relationship between Corporate Strategy and Enterprise Risk Management: Evidence from Canada. Journal of Management and Strategy. 5(1): 1-17.
Bentley-Goode, K. A., Omer, T. C., & Sharp, N. Y. (2013). Business strategy, financial reporting irregularities, and audit effort. Contemporary Accounting Research, 30(2): 780-817.
Bentley-Goode, K. A., Omer, T. C., & Twedt, B. J. (2019). Does business strategy impact a firm’s information environment?. Journal of Accounting, Auditing & Finance, 34(4): 563-587.
Berry-Stolzle, T., & Xu, J., (2018). Enterprise Risk Management and the Cost of Capital. The Journal of Risk and Insurance, 85(1): 159-201.
Bonabi Ghadim, R., Vaez, S, A., & Asgari Zenozi, E. (2020). Effect of business strategy on the financial statement comparability, emphasizing on information asymmetry in listed companies on Tehran Stock Exchange. Journal of Financial Accounting Research, 1(43): 39-56. (in Persian)
Bui, B., & De Villiers, C. (2017). Business strategies and management accounting in response to climate change risk exposure and regulatory uncertainty. The British Accounting Review, 49(1): 4-24.
Campbell,  J, L., Lee, H, S., Lu, H., & Steele, L, B. (2020). Express Yourself: Why Managers' Disclosure Tone Varies Across Time and What Investors Learn from It. Contemporary Accounting Research, 37(2): 1140-1171.
Campbell‐Hunt, C. (2000). What have we learned about generic competitive strategy? A meta‐analysis. Strategic Management Journal, 21: 127–154.
Cescon, F., Costantini, A., & Rossi, G. (2013). The influence of business strategy and ownership on management accounting innovations and risk management techniques: An empirical analysis in large manufacturing companies in Italy. Udine, Italy: University of Udine, Department of Economics and Statistics.
Cohen, J., Krishnamoorthy, G., & Wright, A. (2004). The corporate governance mosaic and financial reporting quality. Journal of Accounting Literature, 23: 87–152.
Davis, A. K., Piger, J. M., & Sedor, L. M. (2012). Beyond the numbers: Measuring the information content of earnings press release language. Contemporary Accounting Research, 29(3): 845-868.
Elshandidy, T., & Neri, L. (2015). Corporate governance, risk disclosure practices, and market liquidity: Comparative evidence from the UK and Italy. Corporate Governance: An International Review, 23(4): 331-356.
Elshandidy, T., & Shrives, P. J. (2016). Environmental incentives for and usefulness of textual risk reporting: Evidence from Germany. The International Journal of Accounting, 51(4): 464-486.
Elshandidy, T., & Zeng, C. (2021). The value relevance of risk-related disclosure: Does the tone o  disclosure matter?. Borsa Istanbul Review, 22(3), 498-514.
Elshandidy, T., Neri, L., & Guo, Y. (2018). Determinants and impacts of risk disclosure quality: evidence from China. Journal of Applied Accounting Research, 19(4): 518-536.
Elshandidy, T., Shrives, P. J., Bamber, M., & Abraham, S. (2018). Risk reporting: A review of the literature and implications for future research. Journal of Accounting Literature, 40: 54-82.
Frigo, M. L., & Anderson, R. J. (2012). Strategic risk management: The new core competency. John Wiley & Sons.
Gordon, L.A, Loeb, M.P. & Tseng, C-Y. (2009). Enterprise risk management and firm performance: A contingency perspective. Journal of Accounting and Public Policy, 28 (4): 301-327.
Hajiha, Z. (2019). Business strategy, Material Weaknesses of Internal Controls and Audit Report Delay. Empirical Research in Accounting, 31: 153-179. (in Persian)
Hajiha, Z., & Ranjbar Navi, R. (2019). The Effect of Business Strategy and Overvalued Equities on Stock Price Crash Risk. Journal of Financial Accounting Research, 2(36): 45-64. (in Persian)
Hambrick, D. C. (1983). Some tests of the effectiveness and functional attributes of Miles and Snow's strategic types. Academy of Management Journal, 26(1): 5-26.
Hanley, K. W., & Hoberg, G. (2010). The information content of IPO prospectuses. The Review of Financial Studies, 23(7): 2821-2864.
Harner, M. M. (2010). Barriers to effective risk management. Seton Hall, 40: 1323-1365.
Henry, E. (2008). Are investors influenced by how earnings press releases are written?. The Journal of Business Communication, 45(4): 363-407.
Higgins, D., Omer, T. C., & Phillips, J. D. (2015). The influence of a firm's business strategy on its tax aggressiveness. Contemporary Accounting Research, 32(2): 674-702.
Hj Togok, S., Ruhana Isa, C., & Zainuddin, S. (2016). Enterprise Risk Management Adoption in Malaysia: A Disclosure Approach. Asian Journal of Business and Accounting, 9(1): 83-104.
Hoyt, R. E. & Liebenberg, A. P. (2009). The Value of Enterprise Risk Management. Journal of Risk and Insurance, 78: 795-822.
Hoyt, R. E., & A. P. Liebenberg. (2011). The Value of Enterprise Risk Management. The Journal of Risk and Insurance, 78(4): 795-822.
Hsieh, C. C., Ma, Z., & Novoselov, K. E. (2019). Accounting conservatism, business strategy, and ambiguity. Accounting, Organizations and Society, 74: 41-55.
Huang, X., Teoh, S. H., & Zhang, Y. (2013). Tone management. The Accounting Review, 89(3): 1083-1113.
Hutsaliuk, O., Koval, V., Tsimoshynska, O., Koval, M., & Skyba, H. (2020). Risk management of forming enterprises integration corporate strategy. TEM Journal, 9(4): 1514‐1523.
International Accounting Standards Board. (2010). Management commentary, practice statement. London: IASB.
Janney, J. J., & Dess, G. G. (2006). The risk concept for entrepreneurs reconsidered: New challenges to the conventional wisdom. Journal of Business Venturing, 21(3): 385–400.
Johnson, V.E., Khurana, I.K., & Reynolds, J.K., (2002). Audit-firm tenure and the quality of financial reports. Contemporary Accounting Research, 19 (4): 637–660.
Kashanipour, M., Aghaee, M.A., & Mohseni Namaghi, D. (2019). Information Disclosure Tone and Future Performance. Accounting and Auditing Review, 26(4): 570-594. (in Persian)
Khlif, H., & Hussainey, K. (2016). The association between risk disclosure and firm characteristics: a meta-analysis. Journal of Risk Research, 19(2): 181-211.
Kravet, T., & Muslu, V. (2013). Textual risk disclosures and investors’ risk perceptions. Review of Accounting Studies, 18(4): 1088-1122.
Kravet, T., & Muslu, V. (2013). Textual risk disclosures and investors’ risk perceptions. Rev. Acc. Stud, 18(4): 1088–1122.
Krippendorff, K. (2004). Content Analysis: An Introduction to its Methodology. 2nd ed, Sage, Beverly Hills.
Kuo, Y. F., Lin, Y. M., & Chien, H. F. (2020). Corporate Social Responsibility, Enterprise Risk Management, and Real Earnings Management: Evidence from Managerial Confidence. Finance Research Letters, 41: 1-51.
Lam, J. (2003). Enterprise Risk Management: From Incentives to Controls. John Wiley & Sons, Inc., Hoboken, New Jersey.
Leopizzi, R., Iazzi, A., Venturelli, A. & Principale, S. (2019). Nonfinancial risk disclosure: the ‘state of the art’ of Italian companies. Corporate Social Responsibility and Environmental Management, 27 (1): 358-368.
Liebenberg, A.P. & Hoyt, R.E. (2003). The determinants of enterprise risk management: Evidence from the appointment of chief risk officers. Risk Management and Insurance Review, 6(1): 37-52.
Lim, E. K., Chalmers, K., & Hanlon, D. (2018). The influence of business strategy on annual report readability. Journal of Accounting and Public Policy, 37(1): 65-81.
Linsley, P. M., & Shrives, P. J. (2006). Risk reporting: A study of risk disclosures in the annual reports of UK companies. The British Accounting Review, 38(4): 387-404.
Maniora, J. (2018). Mismanagement of sustainability: What business strategy makes the difference? Empirical evidence from the USA. Journal of Business Ethics, 152(4): 931-947.
March, J. G., & Shapira, Z. (1987). Managerial perspectives on risk and risk taking. Management Science, 33(11): 1404–1418.
Mehradi, R., Badavarnahandi, Y., Zeinali, M., & Baradaran hassanzadeh, H. (2021). Impact of Conservatism in Risk Disclosure on the Information Content of Accounting Information and Stock Return Synchronicity. Journal of Financial Accounting Research, 14(50): 153-168. (in Persian)
Miccolis, J. & Shah, S. (2000). Enterprise Risk Management: An Analytic Approach. Tillinghast-Towers Perrin, Parsippany, NJ.
Miihkinen, A. (2012). What drives quality of firm risk disclosure?: the impact of a national disclosure standard and reporting incentives under IFRS. The International Journal of Accounting, 47(4): 437-468.
Miles, R. E., & Snow, C. C. (2003). Organizational strategy, structure, and process. Stanford, CA: Stanford University Press.
Miles, R. E., Snow, C. C., Meyer, A. D., & Coleman Jr., H. J. (1978). Organizational strategy, structure, and process. Academy of Management Review, 3(3): 546-562.
Milne, M. & Adler, R. (1999). Exploring the reliability of social and environmental disclosures content analysis. Accounting, Auditing and Accountability Journal, 12(2): 237-256.
Navissi, F., Sridharan, V. G., Khedmati, M., Lim, E. K., & Evdokimov, E. (2017). Business strategy, over-(under-) investment, and managerial compensation. Journal of Management Accounting Research, 29(2): 63-86.
Nocco, B.W., & Stulz, R.M. (2006). Enterprise risk management: theory and practice. Journal of Applied Corporate Finance, 18 (4): 8– 20.
O’Keefe, T.B., King, R.D., & Gaver, K.M. (1994). Audit fees, industry specialization, and compliance with GAAS reporting standards. Auditing, 13: 41–55.
Oliveira, J., Rodrigues, L. L., & Craig, R. (2011). Risk‐related disclosures by non‐finance companies. Managerial Auditing Journal, 24(1): 39-57.
Olson, D. L., & Wu, D. D. (2010). Enterprise risk management models. Heidelberg: Springer.
Parry, V. K. A., & Lind, M. L. (2016). Alignment of business strategy and information technology considering information technology governance, project portfolio control, and risk management.
PorAhmadi, M, H., & Farsad Amanollahi, G, R. (2021). The Effect of Enterprise Risk Management on the Relationship between External Financing and Earnings Management. Financial Accounting and Auditing Research, 49: 73-95. (in Persian)
Porter, M. E. (1985). Competitive advantage: Creating and sustaining superior performance. Free Press.
Porter, M. E. (1996). What is strategy?. Harvard Business Review, 74(6): 61–78.
Porter, M.E. (2008). The five competitive forces that shape strategy. Harvard Business Review, 86 (1): 78–93.
Public Company Accounting Oversight Board (PCAOB). (2007). An audit of internal control over financial reporting that is integrated with an audit of financial statements. Audit Statement No. 5.
Rahman, Md J., Jia, L., & Sultana, R. (2021). Business strategy and systematic risk: Evidence from China. J Corp Account Finance, 1–19.
Rajagopalan, N. (1997). Strategic orientations, incentive plan adoptions, and firm performance: Evidence from electric utility firms. Strategic Management Journal, 18(10): 761-785.
Rehman, A. U., & Anwar, M. (2019). Mediating role of enterprise risk management practices between business strategy and SME performance. Small Enterprise Research, 26(2): 207-227.
Rezaei Pitenoei, Y., Gholamrezapoor, M., Amirnia, N., & S Kazemi, S, Pouria. (2021). Strategy and Corporate Social Responsibility Disclosure. Journal of Accounting Knowledge, 45(2): 67-86. (in Persian)
Ricardianto, P., Lembang, A., Tatiana, Y., Ruminda, M., Kholdun, A., Kusuma, I., & Endri, E. (2023). Enterprise risk management and business strategy on firm performance: The role of mediating competitive advantage. Uncertain Supply Chain Management, 11(1): 249-260.
Rogers, J. L., Van Buskirk, A., & Zechman, S. L. (2011). Disclosure tone and shareholder litigation. The Accounting Review, 86(6): 2155-2183.
Schleicher, T. (2012). When is good news really good news?. Accounting and Business Research, 42(5): 547-573.
Smith, M. & Taffler, R.J. (2000). The chairman’s statement – a content analysis of discretionary narrative disclosures. Accounting, Auditing and Accountability Journal, 13(5): 624-647.
Snow, C. C., & Hambrick, D. C. (1980). Measuring organizational strategies: Some theoretical and methodological problems. Academy of Management Review, 5(4): 527-538.
Solomon, J., Solomon, A. & Norton, S. (2000), A conceptual framework for corporate risk disclosure emerging from the agenda for corporate governance reform. The British Accounting Review, 32(4): 447-478.
Soltanizadeh, S., Rasid, S. Z. A., Golshan, N. M., & Ismail, W. K. W. (2016). Business strategy, enterprise risk management and organizational performance. Management Research Review, 39(9): 1016-1033.
Tan, H.T., & Yeo. F. (2022). You Have Been Forewarned the Effects of Risk Management Disclosures and Disclosure Tone on Investors’ Judgments. Accounting, Organizations and Society, 104: 1-39.
Tan, H.-T., Wang, E. Y., & Zhou, B. (2014). When the use of positive language backfires: The joint effect of tone, readability, and investor sophistication on earnings judgments. Journal of Accounting Research, 52(1): 273-302.
The Committee of Sponsoring Organizations of the Treadway Commission (COSO). 1992. Internal Control-Integrated Framework, Executive Summary.
The Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2004. Enterprise Risk Management- Integrated Framework, Executive Summary.
Wang, K. (2020). Is the Tone of Risk Disclosures in MD&As Relevant to Debt Markets? Evidence from the Pricing of Credit Default Swaps. Contemporary Accounting Research, 38(2): 1465-1501.
Wang, T-S., Lin, Y-N., Werner, E., & Chang, H. (2018). The relationship between external financing activities and earnings management: Evidence from enterprise risk management. International Review of Economics and Finance, 58: 312-329.
Woods, M., Linsley, P., & Maffei, M. (2016). Accounting and risk special issue: Editorial. The British Accounting Review, 49(1): 1-30.
Woon, L.F., Azizan, N.A. and Samad, M.F.A. (2011). A strategic for value enhancing enterprise risk amangement. Journal of Global Business and Economics, 2(1): 23-48.
Wu, D. D., Chen, S. H., & Olson, D. L. (2014). Business intelligence in risk management: Some recent progresses. Information Sciences, 256: 1–7.
Zott, C., & Amit, R. (2008). The fit between product market strategy and business model: Implications for firm performance. Strategic Management Journal, 29(1): 1–26.
 
    • Article View: 647
    • PDF Download: 761
Financial Accounting Knowledge
Volume 10, Issue 2 - Serial Number 37
June 2023
Pages 149-184
Files
  • XML
  • PDF 1.54 M
Share
How to cite
  • RIS
  • EndNote
  • Mendeley
  • BibTeX
  • APA
  • MLA
  • HARVARD
  • CHICAGO
  • VANCOUVER
Statistics
  • Article View: 647
  • PDF Download: 761

APA

Azimianmoez, A. , Aflatooni, A. and Zalaghi, H. (2023). The Mediator Role of Risk Management in the Relationship between Business Strategy and Tone of Risk Disclosure. Financial Accounting Knowledge, 10(2), 149-184. doi: 10.30479/jfak.2023.18320.3063

MLA

Azimianmoez, A. , , Aflatooni, A. , and Zalaghi, H. . "The Mediator Role of Risk Management in the Relationship between Business Strategy and Tone of Risk Disclosure", Financial Accounting Knowledge, 10, 2, 2023, 149-184. doi: 10.30479/jfak.2023.18320.3063

HARVARD

Azimianmoez, A., Aflatooni, A., Zalaghi, H. (2023). 'The Mediator Role of Risk Management in the Relationship between Business Strategy and Tone of Risk Disclosure', Financial Accounting Knowledge, 10(2), pp. 149-184. doi: 10.30479/jfak.2023.18320.3063

CHICAGO

A. Azimianmoez , A. Aflatooni and H. Zalaghi, "The Mediator Role of Risk Management in the Relationship between Business Strategy and Tone of Risk Disclosure," Financial Accounting Knowledge, 10 2 (2023): 149-184, doi: 10.30479/jfak.2023.18320.3063

VANCOUVER

Azimianmoez, A., Aflatooni, A., Zalaghi, H. The Mediator Role of Risk Management in the Relationship between Business Strategy and Tone of Risk Disclosure. Financial Accounting Knowledge, 2023; 10(2): 149-184. doi: 10.30479/jfak.2023.18320.3063

  • Home
  • About Journal
  • Editorial Board
  • Submit Manuscript
  • Contact Us
  • Sitemap

News

Financial Accounting Knowledge, is licensed under a Creative Commons Attribution 4.0 International License (CC BY NC) .

 

Newsletter Subscription

Subscribe to the journal newsletter and receive the latest news and updates

© Journal Management System. Powered by Sinaweb