RISK MANAGEMENT INFORMATION DISCLOSURE AND CORPORATE FINANCIAL PERFORMANCE

ABSTRACT

The study aims at investigating the impact of risk management information disclosure on corporate financial performance using a panel data of fourteen banks for the period 2013 – 2022. The main objective of this research is to determine the relationship between risk management information disclosure and corporate financial performance. The variables considered are cooperate financial performance, strategic management information disclosure, operational risk management information disclosure, liquidity risk management information disclosure and reputational risk management information disclosure. Corporate financial performance is proxied by return on assets which is the dependent variable of the study, while, strategic management information disclosure, operational risk management information disclosure, liquidity risk management information disclosure and reputational risk management information disclosure are the independent variable. The study carries out a histogram normality test to describe on average the skewness, kurtosis, standard deviation and Jarque-Bera statistics of the variables. All the variables show a leptokurtic distribution. The study checks the relationship between the variables using the correlation analysis, some of the variable exhibited a positive relationship among themselves, while others show a negative relationship. The highest correlation coefficient from the result is 0.543283, which is the relationship between liquidity risk disclosure and strategic risk disclosure. This helps to facilitate decision that there is no problem of multicollinearity in the regression variables because the highest correlation coefficient is less than the bench mark of 0.7. The Breusch-Pagan-Godfrey test of heteroskedasticity was also used to test for the absence multicollinearity. The result revealed a probability value of 0.3790 > 0.05. This indicated the absence of problem of multicollinearity. The alternative hypothesis of homoskedasticity residual is accepted for the null hypothesis. Reset test of model specification was also carried out to test if the model used for this study was not mis specified. The results of the Ramsey RESET model specification test reported a probability value of 0.1139 > 0.05. This led to the rejection of the null hypothesis of model mis specification. Therefore, the model for this study was correctly specified. Cooperate financial performance have a positive relationship between liquidity risk management information disclosure, operational risk management information disclosure and strategic risk management information disclosure. While reputational risk management information disclosure revealed a negative relationship with cooperate financial performance. The coefficient of determination revealed 75.55% systematic cross-sectional variation in the variable of return on assets. The F-statistics indicated that all the explanatory variables taken together are statistically significant. The study later recommended that firms should pay more attention to their liquidity risk management information disclosure as this will help to improve the financial performance of the firm.