Purpose: The purpose of this study was to investigate the relationship between mandatory risk disclosure practices and firm value in Indian-listed non-financial companies, considering the implementation of Ind-AS 107. The study aimed to analyze the impact of required risk disclosures on the valuation of the Indian listed firms and contribute to the understanding of risk reporting practices in the Indian context.

Methodology: The study employed a panel data regression analysis using a fixed effect model. Data were collected from the NIFTY500 Index for the period from 2018–2022. A mandatory risk disclosure index was developed to assess the level of risk-related information provided by companies as per Ind-AS 107.

Findings: The results indicated a significant positive relationship between mandatory risk disclosure practices and firm value in Indian-listed non-financial companies. The study revealed that companies with higher levels of mandatory risk disclosures tend to have higher valuations. Additionally, firm size was positively associated with firm value, while firm risk (leverage) was negatively correlated with valuation.Practical

Implications: The study’s conclusions indicated that strengthening required risk disclosure procedures would have a favorable impact on Indian non-financial listed businesses’ valuation. These findings could be utilized by regulatory bodies and standard-setters to motivate businesses to provide more thorough and transparent risk-related data. This, in turn, may improve investor confidence, attract higher investments, and contribute to more informed decision-making.

Originality: The study added to the body of knowledge by determining how the disclosure of required risk affected Indian enterprises’ valuation.

1. Abdullah, M., Shukor, Z. A., Mohamed, Z. M., & Ahmad, A. (2015). Risk management disclosure: A study on the effect of voluntary risk management disclosure toward firm value. Journal of Applied Accounting Research, 16(3), 400–432. https://doi.org/10.1108/JAAR-10-2014-0106
2. Alsaeed, K. (2006). The association between firm‐specific characteristics and disclosure: The case of Saudi Arabia. Managerial Auditing Journal, 21(5), 476–496. https://doi.org/10.1108/02686900610667256
3. Amidu, M. (2007). How does dividend policy affect performance of the firm on Ghana Stock Exchange? Investment Management and Financial Innovations, 4(2), 103–112.
4. Amran, A., Bin, A. M., & Hassan, B. C. (2009). Risk reporting: An exploratory study on risk management disclosure in Malaysian annual reports. Managerial Auditing Journal, 24(1), 39–57. https://doi.org/10.1108/02686900910919893
5. Arena, C., Bozzolan, S., & Imperatore, C. (2023). The trade-off between mandatory and voluntary disclosure: Evidence from oil companies' risk reporting. Journal of Accounting, Auditing & Finance, 38(4), 986–1008. https://doi.org/10.1177/0148558X211025250
6. Beattie, V., McInnes, B., & Fearnley, S. (2004). A methodology for analyzing and evaluating narratives in annual reports: A comprehensive descriptive profile and metrics for disclosure quality attributes. Accounting Forum, 28(3), 205–236. https://doi.org/10.1016/j.accfor.2004.07.001
7. Botosan, C. A., & Plumlee, M. A. (2002). A re‐examination of disclosure level and the expected cost of equity capital. Journal of Accounting Research, 40(1), 21–40. https://doi.org/10.1111/1475-679X.00037
8. Bravo, F. (2017). Are risk disclosures an effective tool to increase firm value? Managerial and Decision Economics, 38(8), 1116–1124. https://doi.org/10.1002/mde.2850
9. Charumathi, B., & Ramesh, L. (2020). Impact of voluntary disclosure on the valuation of firms: Evidence from Indian companies. Vision, 24(2), 194–203. https://doi.org/10.1177/0972262920914138
10. Cheng, M.-C., & Tzeng, Z.-C. (2011). The effect of leverage on firm value and how the firm financial quality influences this effect. World Journal of Management, 3(2), 30–53.
11. Deephouse, D. L., & Carter, S. M. (2005). An examination of differences between organizational legitimacy and organizational reputation. Journal of Management Studies, 42(2), 329–360. https://doi.org/10.1111/j.1467-6486.2005.00499.x
12. Demski, J. S. (1974). Choice among financial reporting alternatives. The Accounting Review, 49(2), 221–232. https://www.jstor.org/stable/245097
13. Dua, P., & Nainwal, N. (2024). Does the market reward corporate environmentalism? Evidence from Indian IT firms. Indian Journal of Finance, 18(6), 46–61. https://doi.org/10.17010/ijf/2024/v18i6/173968
14. Dye, R. A. (1990). Mandatory versus voluntary disclosures: The cases of financial and real externalities. Accounting Review, 65(1), 1–24. https://www.jstor.org/stable/247874
15. Easley, D., & O'hara, M. (2004). Information and the cost of capital. The Journal of Finance, 59(4), 1553–1583. https://doi.org/10.1111/j.1540-6261.2004.00672.x
16. Einhorn, E. (2005). The nature of the interaction between mandatory and voluntary disclosures. Journal of Accounting Research, 43(4), 593–621. https://doi.org/10.1111/j.1475-679X.2005.00183.x
17. Elshandidy, T., Fraser, I., & Hussainey, K. (2013). Aggregated, voluntary, and mandatory risk disclosure incentives: Evidence from UK FTSE all-share companies. International Review of Financial Analysis, 30, 320–333. https://doi.org/10.1016/j.irfa.2013.07.010
18. Entwistle, G. (1997). Managing disclosure: The case of research and development in knowledge-based firms. University of Western Ontario.
19. Fasihi, S., & Hosseini, S. A. (2020). Do risk disclosure increase firms' value? Iranian Journal of Finance, 4(2), 67–76. https://doi.org/10.22034/ijf.2020.232416.1132
20. Geng, C., & Liu, C. (2011). A research about how the dividend policy influences the enterprise value on the condition of consecutive cash payoff. International Journal of Business, Human and Social Sciences, 4.0(5). https://doi.org/10.5281/zenodo.1331805
21. Gupta, S., & Bhalla, L. (2022). Impact of integrated reporting on firm value: An Indian perspective. International Journal of Sustainable Society, 14(4), 323–334. https://doi.org/10.1504/IJSSOC.2022.127983
22. Gupta, S., Chandel, A., & Bhalla, L. (2023). XBRL adoption and information asymmetry: Evidence from the Indian capital market. Indian Journal of Finance, 17(7), 25–36. https://doi.org/10.17010/ijf/2023/v17i7/170240
23. Healy, P. M., & Palepu, K. G. (2001). Information asymmetry, corporate disclosure, and the capital markets: A review of the empirical disclosure literature. Journal of Accounting and Economics, 31(1–3), 405–440. https://doi.org/10.1016/S0165-4101(01)00018-0
24. Henning, S. L., Lewis, B. L., & Shaw, W. H. (2000). Valuation of the components of purchased goodwill. Journal of Accounting Research, 38(2), 375–386. https://doi.org/10.2307/2672938
25. Holland, J. (2006). Fund management, intellectual capital, intangibles, and private disclosure. Managerial Finance, 32(4), 277–316. https://doi.org/10.1108/03074350610652242
26. Hossain, M., & Hammami, H. (2009). Voluntary disclosure in the annual reports of an emerging country: The case of Qatar. Advances in Accounting, 25(2), 255–265. https://doi.org/10.1016/j.adiac.2009.08.002
27. Institute of Chartered Accountants of India. (2021). Report on compliance with Ind-AS107: A study on financial disclosures. https://frrb.icai.org/wp-content/uploads/2021/05/Study-on-Compliance-of-Financial-Reporting-Requirements-IND-AS-Framework.pdf
28. Jain, S., & Raithatha, M. (2021). Risk disclosures and firm value: The role of governance in an emerging market. International Journal of Productivity and Performance Management, 71(8), 3205–3227. https://doi.org/10.1108/IJPPM-09-2020-0476
29. Jain, S., Dhillon, L. K., Aggarwal, R., & Bagga, T. (2023). Corporate governance mechanism, ownership structure, and firm performance: Evidence from India. Indian Journal of Finance, 17(9), 25–40. https://doi.org/10.17010/ijf/2023/v17i9/173182
30. Kamaruzaman, S. A., Ali, M. M., Ghani, E. K., & Gunardi, A. (2019). Ownership structure, corporate risk disclosure, and firm value: A Malaysian perspective. International Journal of Managerial and Financial Accounting, 11(2), 113–131. https://doi.org/10.1504/IJMFA.2019.099766
31. Khlif, H., & Hussainey, K. (2016). The association between risk disclosure and firm characteristics: A meta-analysis. Journal of Risk Research, 19(2), 181–211. https://doi.org/10.1080/13669877.2014.961514
32. Liang, C.-J., & Yao, M.-L. (2005). The value-relevance of financial and non-financial information—Evidence from Taiwan's information electronics industry. Review of Quantitative Finance and Accounting, 24(2), 135–157. https://doi.org/10.1007/s11156-005-6334-1
33. Linsley, P. M., & Shrives, P. J. (2005). Examining risk reporting in UK public companies. Journal of Risk Finance, 6(4), 292–305. https://doi.org/10.1108/15265940510613633
34. 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. https://doi.org/10.1016/j.bar.2006.05.002
35. Louhichi, W., & Zreik, O. (2015). Corporate risk reporting: A study of the impact of risk disclosure on firms reputation. Economics Bulletin, 35(4), 2395–2408. https://shs.hal.science/halshs-01271284/
36. Omar, B., & Simon, J. (2011). Corporate aggregate disclosure practices in Jordan. Advances in Accounting, 27(1), 166–186. https://doi.org/10.1016/j.adiac.2011.05.002
37. Shivaani, M. V., & Agarwal, N. (2020). Does competitive position of a firm affect the quality of risk disclosure? Pacific-Basin Finance Journal, 61, Article 101317. https://doi.org/10.1016/j.pacfin.2020.101317
38. Singh, G., & Kaur, S. (2022). Impact of Covid-19 on corporate governance constitution and firm performance in the Indian banking sector. SCMS Journal of Indian Management, 19(3), 112–123.
39. Suijs, J. (2007). Voluntary disclosure of information when firms are uncertain of investor response. Journal of Accounting and Economics, 43(2–3), 391–410. https://doi.org/10.1016/j.jacceco.2006.10.002
40. Tache, M. (2021). Risk disclosure and firm value: Evidence from the United Kingdom. Central European Economic Journal, 8(55), 15–24.
41. Tauringana, V., & Chithambo, L. (2016). Determinants of risk disclosure compliance in Malawi: A mixed-method approach. Journal of Accounting in Emerging Economies, 6(2), 111–137. https://doi.org/10.1108/JAEE-03-2014-0015
42. Verma, B. P. (2022). Evidence of the impact of EVA on the Indian automotive industry. Indian Journal of Finance, 16(11), 8–24. https://doi.org/10.17010/ijf/2022/v16i11/172461
43. Wu, J., & Pangarkar, N. (2006). Rising to the global challenge: Strategies for firms in emerging markets. Long Range Planning, 39(3), 295–313. https://doi.org/10.1016/j.lrp.2006.07.004