The value relevance of risk-related disclosure: Does the tone of disclosure matter?

This paper investigates whether risk-related disclosure, which includes aggregate risk disclosure and its tone, including upside downside disclosures, is value relevant for investors in the UK market. Based on 1941 firm-year observations nonfinancial firms listed FTSE All-Share, we employ fixed-effect estimations find that relevance of information not statistically observable unless a distinction made tone. Specifically, upside- (downside-) significantly increases (decreases) stock prices. We also exhibits cross-sectional variations conditional firms’ growth profitability. In particular, an asymmetric response prices to downside-risk disclosures high-growth but those with low growth. addition, profit-making firms, loss-making provide influence Our contributes extant research reporting by providing new evidence extent which, how, combining accounting numbers are examined extensively prior non-accounting (i.e., information) important observing relevance. advances usefulness looking at tone this how market responds each type disclosure.