A Study of Qualitative Characteristics and Predictive of Narrative Risk Information for Financial Reporting in Japan, UK and USA

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This study aims to examine the relations between risk management and risk reporting for stakeholders. Risk reporting is becoming an integral part of a management report. It is stated that enhanced information about what companies do to assess and manage key business risk of all types will(1) provide practical forward-looking information,(2) reduce the cost of capital,(3) encourage better risk management,(4) help to ensure the equal treatment of all investors, and(5) improve accountability for stewardship, investor protection and the usefulness of financial reporting.Companies with publicly-traded shares should lead the introduction of enhanced risk reporting in annual reports. This study states that it is necessary to issue regulatory guideline and the framework on integrated risk reporting in annual reports. It is also important to mention that since risk management is involved in the risk reporting process, motivation to directors is very important along with the regulatory guidelines for better risk reporting.