Corporate Risk Management Disclosure and Investor Confidence in Listed Pharmaceutical Firms in Nigeria
DOI:
https://doi.org/10.67487/ijfmg.v2i3.336Keywords:
corporate risk management, investor’s confidence, market capitalisationAbstract
Every organisation is exposed to different categories of risks in an attempt to achieve its corporate objectives. Management's efforts to mitigate such risks are crucial for the survival of these entities. However, how the disclosure of those risks affects investors in the capital market is of great concern. Therefore, this study is conducted to examine the extent to which corporate risk management disclosure affects investors’ confidence in pharmaceutical firms in Nigeria. The corporate risks in this study were proxied by financial risk, business risk, operational risk, regulatory risk and strategic risk, while the investor’s confidence was proxied by market capitalisation. The population of the study comprised seven (7) pharmaceutical firms listed on the floor of the Nigerian Exchange Group, of which the entire seven firms were adopted for the study using the census sampling technique. The data for the study were extracted from the published financial statements of the selected firms for the period of 2015 to 2024 using content analysis through the disclosure checklist developed by the researcher. The data were analysed using descriptive statistics, correlation and regression with the aid of STATA version 10. The results of analyses revealed that business risk disclosure (p-value = 0.0088), operational risk disclosure (p-value = 0.0031) and strategic risk disclosure (p-value = 0.0143) showed a positive and significant relationship with market capitalisation; while financial risk disclosure (p-value = 0.4634) and regulatory risk disclosure (p-value = 0.1734) showed no significant relationship with market capitalisation. Therefore, the study concluded that corporate risk management disclosure influences investors' behaviour in pharmaceutical firms in Nigeria. The study recommended that pharmaceutical firms should not only engage in risk mitigation but should also disclose more information on corporate risk management, as such transparency will attract investors to the firms.
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