Determinants of risk reporting practices in Saudi Arabia: an institutional perspective

TY - JOUR

T1 - Determinants of risk reporting practices in Saudi Arabia

T2 - an institutional perspective

AU - Alsahlawi, Rawan

AU - Fifield, Suzanne

AU - Dunne, Theresa

N1 - © Emerald Publishing Limited

PY - 2025/8/22

Y1 - 2025/8/22

N2 - Purpose This study examines the influence of institutional pressures on the extent of corporate risk reporting by Saudi-listed companies, drawing on Oliver’s (1991) framework of strategic responses to institutional processes and the institutional logics perspective. The research investigates ten hypotheses that reflect the causes, constituents, content, control, and context of institutional pressures. Design/methodology/approach A disclosure index was developed based on IFRS 7 to measure the extent of risk information disclosed in annual reports. Using a sample of 104 companies for the year 2019 and employing multiple regression analysis, the hypotheses are tested to identify institutional determinants that influence risk reporting practices. Findings Firm size, auditor type, enforcement actions by the Capital Market Authority, and director shareholdings significantly influence risk disclosure levels. By contrast, profitability, family representation, gearing, presence of chartered accountants, market uncertainty, and foreign sales do not show statistically significant relationships. The findings offer mixed support for Oliver’s theoretical predictions, revealing that firms are more likely to acquiesce when institutional pressures align with their goals or are coercively imposed. The results highlight that corporate, market, state, and professional logics shape disclosure practices, whilst also underscoring the contextual complexity of institutional influences in emerging markets. Originality/value The study contributes to the literature by extending institutional theory to risk reporting practices in Saudi Arabia and providing insights into how legitimacy, coercion, and professional norms interact with firm characteristics. The findings also inform policy by emphasising the importance of regulatory enforcement and auditor quality in enhancing disclosure practices in transitional economies.

AB - Purpose This study examines the influence of institutional pressures on the extent of corporate risk reporting by Saudi-listed companies, drawing on Oliver’s (1991) framework of strategic responses to institutional processes and the institutional logics perspective. The research investigates ten hypotheses that reflect the causes, constituents, content, control, and context of institutional pressures. Design/methodology/approach A disclosure index was developed based on IFRS 7 to measure the extent of risk information disclosed in annual reports. Using a sample of 104 companies for the year 2019 and employing multiple regression analysis, the hypotheses are tested to identify institutional determinants that influence risk reporting practices. Findings Firm size, auditor type, enforcement actions by the Capital Market Authority, and director shareholdings significantly influence risk disclosure levels. By contrast, profitability, family representation, gearing, presence of chartered accountants, market uncertainty, and foreign sales do not show statistically significant relationships. The findings offer mixed support for Oliver’s theoretical predictions, revealing that firms are more likely to acquiesce when institutional pressures align with their goals or are coercively imposed. The results highlight that corporate, market, state, and professional logics shape disclosure practices, whilst also underscoring the contextual complexity of institutional influences in emerging markets. Originality/value The study contributes to the literature by extending institutional theory to risk reporting practices in Saudi Arabia and providing insights into how legitimacy, coercion, and professional norms interact with firm characteristics. The findings also inform policy by emphasising the importance of regulatory enforcement and auditor quality in enhancing disclosure practices in transitional economies.

KW - Institutional theory

KW - Institutional logics

KW - Corporate risk reporting

KW - IFRS 7

KW - Saudi Arabia

UR - https://www.scopus.com/pages/publications/105014798970

U2 - 10.1108/JAEE-01-2025-0028

DO - 10.1108/JAEE-01-2025-0028

M3 - Article

SN - 2042-1168

JO - Journal of Accounting in Emerging Economies

JF - Journal of Accounting in Emerging Economies

ER -