The Effect of Risk Disclosure on the Market Value of the Company - An Empirical Study on Listed Companies in the Egyptian Stock Exchange

The study aimed to examine and analyze the effect of risk disclosure on the market value of the Egyptian listed companies, in addition to identify the nature and type of disclosure of risk information in the annual reports of the Egyptian listed companies and to identify the extent of the benefit and importance of risk information disclosed in the annual reports for investors in the Egyptian stock market. In order to achieve these objectives, the researcher conducted an empirical study on a sample of 94 companies, equivalent to 54% of the study population after excluding the financial firms during the year 2017. Based on the use of different statistical methods, the study found the following results: Firstly, the risk disclosure in the annual reports of the Egyptian listed companies is still low, in particular the disclosure of nonfinancial risks and the risk information disclosed in the annual reports of the Egyptian listed companies is considered financial information about the risks and most of them are good information about the risks. Secondly, there is a difference in the level of disclosure of risk information by the sector, and there is a possibility that risk disclosure will have an important role in influencing the market value of the companies in each sector of study. Thirdly, there is a significant positive relationship between the disclosure of both financial risks and nonfinancial risks and the market value of the Egyptian listed companies. The most significant impact on the market value of listed companies is due to the impact of market risk disclosure followed by profitability and the disclosure of operational risk. Fourthly, there is a significant positive relationship between the disclosure of good information about the risks and market value of the Egyptian listed companies. In the light of the previous results, the study recommended that the Egyptian listed companies should pay attention to improve risk disclosure in annual reports because it is valuable to investors. The study recommended that professional and nonprofessional bodies should develop risk disclosure in the annual reports of the Egyptian listed companies, where the current structure of the accounting disclosure is devoid of an integrated framework for the disclosure of risk. The study recommended that the concerned parties should issue an Egyptian accounting standard for the disclosure of risks; this standard addresses how to prepare risk disclosure reports and how to disclose risk information, which will be the basic reference in this regard.