Abstract:
Within the context of corporate reporting and disclosure, information on risk has
become important because of the complexity of modern businesses and these
complexities have exposed firms to a lot of risks. Aside calls for the study of risk
management disclosure in different cultural context, the effects of risk management
on the profitability of banks still remain an issue. Content analysis was employed
to examine the annual reports of listed banks from 2012 to 2016. Fixed and random
effects techniques were used to assess the effects of corporate governance and
bank-specific characteristics on the extent and quality of risk management
disclosure, and also the effect of risk management disclosure on bank profitability.
The study reveals that the amount of risk management information disclosed by
listed banks in Ghana is very encouraging, that is, compliance level of 69 and 56
percent respectively for extent and quality of risk disclosure. The regression results
suggest that extent of risk management disclosure of listed banks in Ghana is
determined by audit committee independence and liquidity, whereas the quality of
risk management disclosure is influenced by audit committee independence and
bank. Also, extent of risk management disclosure positively affects the profitability
of listed banks. Based on the results, the author recommends that there should be a
strict regulation by the supervisory bodies; Bank of Ghana, Ghana Stock Exchange
and the Securities and Exchange Commission, to enhance the quantity and quality
of risk disclosure by banks. In addition, audit committees of the banking institutions
should positively play their vital role in ensuring that banks comply with Basel II
and IFRS 7 requirements fully.
