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 Posté le: Lun Sep 30, 2013 11:12 pm Sujet du message: Dearth of corporate risk disclosure in Canada sinc |
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{Dearth of corporate risk disclosure in Canada since the global financial crisis}
Michelle de Cordova, CGA: Risk disclosure remains inadequate for many public companies|PHOTO © Dominic SchaeferBy Richard ChuTue Aug 20, 2013 12:01am PSTThe market and economic landscape was shifting dramatically in Canada as the global financial crisis unfolded in 2007 and 2008. But investors would have had a hard time appreciating the risks to their investments based on corporate filings.A study recently released by Vancouver-headquartered CGA-Canada conducted at the University of Ottawa examined the 2007 and 2008 annual reports of 156 non-financial companies that made up the TSX Composite Index. It found little change in the disclosures of risk exposure, risk management and potential impact of market and economic risks despite growing economic turmoil as large financial institutions faced a global credit crunch stemming from the sub-prime mortgage crisis in the U.S.“One would have thought that with the financial crisis,[url=http://www.moncler-sale.org]moncler on sale[/url], there would have been an increase in what companies thought their risks were,” said Tony Quon, one of the study’s authors. “That was the working hypothesis when we began the study. But we just didn’t see the evidence when we did the research.” Quon said one of the reasons risk disclosures didn’t change was because, prior to the financial crisis,[url=http://www.moncler-sale.org]moncler on sale[/url],[url=http://www.moncler-sale.org]discount moncler jackets[/url], many companies were already stating they faced “certain” economic and market risks. It was simply a matter of when they might materialize.But he also noted that firms did not change the potential severity of the risks they disclosed between 2007 and 2008 when market and economic risks were materializing. The study put the risk impacts in five separate categories ranging from insignificant and minor to moderate, major and catastrophic. Quon said most firms listed their market and economic risks between moderate and major and did not change their level of reported risk significantly between 2007 and 2008, even though the negative impact of those risks manifest themselves in 2008 and 2009.The most notable external change was in the overall stock market,[url=http://www.moncler-sale.org]discount moncler jackets[/url], which plummeted in 2008 from a high above 15,000 in June to an annual low of under 7,800 by November before hitting a crisis low of 7,566.94 on March 9,[url=http://www.moncler-sale.org]moncler down jackets[/url], 2009.The study also noted that most of the companies on the TSX Composite recorded a drop in sales in 2009,[url=http://www.moncler-sale.org]moncler outlet[/url], which emphasized the longer-term impacts of business risks.Michelle de Cordova, director of corporate engagement and public policy at NEI Investments, said inadequate risk disclosure remains an issue half a decade after the financial crisis.“We still see some pretty dramatic variations in the disclosure from companies on their risks,” she said. “Sometimes there is nothing there.”The CGA study concluded that even though many companies have instituted enterprise risk management systems to address many of the risks a company faces,[url=http://www.moncler-sale.org]moncler outlet[/url],[url=http://www.moncler-sale.org]moncler sale[/url], executives need to do a better job of communicating the significance of those risks in their reports to shareholders.De Cordova noted that some companies, like Telus (TSX:T),[url=http://www.moncler-sale.org]moncler down jackets[/url], have provided significant disclosures for years, not only about the various risks the company faces but also how they’re trying to mitigate those risks. Many B.C.-based mining companies are also improving their risk disclosures, especially related to the impact of aboriginal claims. But De Cordova said much more improvement is needed in the market generally.Some Canadian executives and directors continue to harbour fears that increased risk disclosures could discourage potential investors.But de Cordova said it boosts investor confidence.“Putting more disclosure about risk and the mitigation that is in place for those risks definitely does not make us feel the company is more risky. It has the opposite effect. When we just see the boilerplate, or nothing at all, that’s when we get nervous.”Tags: University of Ottawa, annual report, investments,[url=http://www.moncler-sale.org]moncler sale[/url], mortgage, mining, aboriginal
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