 A Comparative Analysis Of Environmental Risk Disclosure In German And UK Companies (2006) Ref: fin0002 Potential and actual threats to the environment have made environmental risk disclosure by companies gain currency over the recent years. This study examines whether making risk reporting mandatory increases the quantity, nature and patterns of environmental risk disclosed. Using content analysis based on the annual reports, German companies, which have mandatory requirements on risk reporting, and the United Kingdom (UK) companies, which disclosed risk information voluntarily, are analysed. The findings show that the German companies did not disclose more environmental risk information on the overall as compared with UK companies. The results also show that good news and non-monetary aspects, that mainly boost corporate image, are the most disclosed in both Germany and UK companies. The environmental risk disclosed in both German and UK companies is inadequate, lacks forward-looking information, lacks quantification in monetary terms and the bad news seems suppressed. This suggests that there is a strong relationship between environmental risk reporting and protection of the corporate image which, to a large extent, is consistent with the legitimacy theory in explaining the rationale for companies to disclose environmental risk information. The author concludes that to increase environmental risk reporting: 1. Companies should desist from taking a one-size fit all approach to risk reporting. Rather, a hybrid strategy is recommended to ensure innovations are not stifled. 2. Harmonisation of the accounting standards on risk reporting to reduce competitive disadvantage incurred by companies disclosing. 3. Changing attitudes towards environmental risk issues through educating and training managers. 4. Government provide incentives to encourage environmental risk reporting CHAPTER 1: INTRODUCTION Background to Environmental Risk Disclosure Rationale for the study Research Question and Objectives Usefulness of the research Arrangement of the sections of the study Conclusion CHAPTER 2: REVIEW OF LITERATURE Introduction Environmental risk Environmental risk management Use and Usefulness of Environmental Risk Disclosure ‘Right to Know’ Equity investors and other Stakeholders Lenders requirements Lowering cost of capital To Attract Ethical investors Environmental risk disclosure and Financial Performance Audiences for environmental risk disclosure Nature of Environmental Risk Disclosure Argument for and against Voluntary Disclosure Argument for Mandatory Disclosure Environmental risk; Voluntary or Mandatory Disclosure Environmental Risk Disclosure Theory Legitimacy theory Legitimacy theory and environmental risk disclosure Empirical evidence using Legitimacy theory Nature of news made voluntarily in annual reports Empirical evidence of types of news disclosed by companies An overview of Germany and UK risk disclosure regulations Law and Legislation Accounting standard on risk Other contextual factors that may influence extent of environmental risk disclosure Corporate governance in UK and German Germany and UK in the international accounting context Annual Report as a Vehicle for Communicating Environmental Risk Summary of the Literature Reviewed Hypothesis Formulation Conclusion CHAPTER 3: RESEARCH METHODOLOGY Introduction Choice of Methodology Sampling procedure Data collection Data Counting Method The coding instruments Validation of research instrument Limitations of the method Statistical analysis Conclusion CHAPTER 4 DATA ANALYSIS AND FINDINGS Introduction Comparison of descriptives of total disclosure in German and UK companies Comparison of the disclosures of sample industries in Germany and UK Comparison of type of news within countries (Germany and UK) Comparison of news between German and UK companies A comparison of the five environmental risk categories Content analysis Content analysis of environmental risk disclosures in UK sample companies Evaluation of the Hypothesis Conclusion CHAPTER 5 DISCUSSION OF FINDINGS Introduction Mandatory and voluntary disclosure versus level of disclosure by companies Mandatory and voluntary disclosure versus corporate image Voluntary and mandatory disclosure versus the types of news Voluntary and mandatory disclosure versus monetary information Voluntary and mandatory disclosure versus Environmental risk categories information Mandatory and voluntary disclosure versus (business) costs Conclusion CHAPTER 6 CONCLUSIONS Introduction Conclusions drawn from the study Shortcoming of mandatory risk disclosure The way forward Review of the method and possible improvements REFERENCES AND BIOBIOGRAPHY APPENDICES Appendix A- Environmental risk coding manual/grid Appendix B Coding Schedule Appendix C Sample size and sales turnover Appendix D Environmental risk Industries 
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