The effect of corporate governance practices on risk disclosure level: An empirical investigation on non-financial companies listed in BIST 100 index

After global crises and big corporate scandals, risk reporting has become a very important worldwide concern. Recently, investors are demanding more qualified information regarding the risks that companies come across and they want to know about not only past risks of companies but also risks company may face in the future. Also mandatory or incentive legislations and regulations are other factors forcing companies to engage in more risk disclosure activity. The aim of this study is to investigate the effects of corporate governance practices in companies on their risk reporting level. In this context, risk reporting levels in annual reports of the non-financial companies listed in the BIST100 index were examined by using content analysis method. In the study, company risk disclosure was seperated into four subtitles: financial risk, operational risk, technological and information process risk, and strategic risk and each of these sub-titles of risk disclosure was categorised in terms of being 'monetary and non-monetary', 'future and past oriented', and 'positive, negative and neutral '. Statements in annual reports were considered as a risk disclosure unit. According to the findings of the study, companies report limited future risks and tend to disclose neutral risks rather than positive or negative risks. In addition, it is seen that Turkish companies mostly disclose financial risk in their annual reports while technological risk is the least reported risk type among other risk types. Nearly 53 percent of total risk disclosures is monetary and 47 percent of them is non-monetary. It was found that board size, percentage of female board members, percentage of independent board members, and company size have a relation with risk disclosure level; but there is no relation between risk diclosure level and, frequency of board meetings and leverage of company. In addition, it was found that the risk disclosure level of the companies operating in the energy and technology sectors is greater than the level of companies in the manufacturing sector, while risk disclosure level of companies in other sectors is less than the level of manufacturing companies. Key Words: Corporate Governance, Risk Reporting, Risk Disclosure