Abstract:

Managing the risks and uncertainties of businesses that operate in a volatile and complex market environment has attracted considerable attention among market participants. Such concerns are particularly related to how businesses deal with the occurrence of increased risks in their business operations. In order to portray firms’ commitment towards better transparency and accountability, this study aims to examine the effects of enhanced governance mechanisms as represented by board competency on the voluntary risk disclosure in the annual reports. Board competency is represented by leaders’ commitment and support, duality and international experience. Specifically, this study adopts a quantitative investigation in order to capture the quantity of voluntary risk information in the annual reports of 233 listed firms. This study finds that only leaders’ commitment and support has significant influences on management decisions pertaining to voluntary risk disclosure. These findings indicate the need for further improvements in respect of the creation of effective board of directors. Effective board members can be a valuable mechanism in complementing the commitments of regulators in promoting higher corporate transparency throughout the corporate environment.