Risk Disclosures, Governance and Ownership: Evidence from German Non-Listed Firms

This paper is the first to investigate risk disclosures by German non-listed firms in relation to key attributes of governance and ownership. Based on manual content analysis of risk disclosures by 100 firms in the manufacturing sector we employ univariate tests and multivariate regressions to examine the characteristics and determinants of risk disclosures, respectively. Results suggest that non-listed firms provide fewer risk disclosures but follow similar patterns in respect to the composition of risk disclosures as compared to prior evidence on German listed firms. Consistent with agency theory, the volume of risk disclosures is positively associated with the existence and size of a supervisory board and the use of a Big-4 auditor while negatively associated with concentrated ownership in subsidiaries or family firms. Our findings contribute to limited evidence on risk and discretionary disclosures by non-listed firms.