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 Voluntary risk reportingto enhance institutional and organizational legitimacy: evidence from Portuguese banks
Please use this identifier to cite or link to this item http://hdl.handle.net/10773/6609

title: Voluntary risk reportingto enhance institutional and organizational legitimacy: evidence from Portuguese banks
authors: Oliveira, Jonas
Rodrigues, Lúcia Lima
Craig, Russell
keywords: Disclosure
Financial risk
Legitimacy
Reputation
Portugal
Stakeholders
Voluntary
issue date: 2011
publisher: Emerald Group Publishing
abstract: Purpose – This paper aims to explore the factors that affected the voluntary risk-related disclosures (RRD) in the individual annual reports for 2006 of Portuguese banks. It also explores the extent to which those reports conformed to Basel II requirements in terms of the voluntary disclosure of operational risk and capital structure and adequacy matters.

Design/methodology/approach – The authors conduct a content analysis of the annual reports of a sample of 111 banks. Voluntary operational risk and capital structure and adequacy disclosures were assessed using a list of disclosure categories that were developed from the Third Pillar disclosure requirements of the Basel II Accord.

Findings – Stakeholder monitoring and corporation reputation are crucial factors that explain the risk reporting practices observed. Voluntary risk reporting appears to enhance legitimacy for two major reasons: first, by fulfilling institutional pressures to assure the effectiveness of market discipline; and second, by managing stakeholder perception of a corporation's reputation.

Originality/value – The voluntary RRD observed are shown to be explained by legitimacy theory and resources-based perspectives. This theoretical framework has not been tested hitherto in explaining the motives for banks to make voluntary RRD.
URI: http://hdl.handle.net/10773/6609
ISSN: 1358-1988
publisher version/DOI: http://dx.doi.org/10.1108/13581981111147892
source: Journal of Financial Regulation and Compliance
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