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Title: Risk and opportunity reports of German banks in accordance with German accounting standards : an empirical analysis of adoption, development, and determinants of extent
Author: Buerger, Stefan Karl
ISNI:       0000 0004 9353 5601
Awarding Body: University of Bolton
Current Institution: University of Bolton
Date of Award: 2020
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Objective - On the basis of economic and sociological theories, the study presents empirical evidence of the extent to which the requirements of German Accounting Standard 20 for the risk report and the opportunity report (Management Report)—which have been in force since 2013—have been adopted, how reporting on opportunities and risks has developed over time, and which economic and sociological determinants can influence the scope of reporting. Research Design - The study follows a post-positivist research design since both quantitative and qualitative methods are used to answer the research questions. Based on a detailed content analysis of the management reports of German banks, a meaningful adoption index, a risk disclosure index, and an opportunity disclosure index for the period 2012 (one year before obligatory first-time adoption) to 2016 (most recent financial year for which all annual financial statements of the relevant banks have been disclosed up to the completion of this thesis) were developed. In the present study, 141 management reports are evaluated. This is followed by an investigation based on statistical methods to identify the economic determinants often used in the literature which could have a significant influence on the scope of risk and opportunity reporting. The quantitative results are compared to the results of a questionnaire given to key stakeholders in German banks. The results of the non-parametric questionnaire are analysed using statistical methods and are validated by qualitative interviews with relevant decision-makers. The interviews focus especially on the identification of possible sociological determinants for the scope of opportunity reporting and are analysed using qualitative content analysis. Results - The results show that the scope of risk reporting is essentially in line with the basic considerations of principal-agent theory and supports the premises of homo economicus. The scope of the opportunity reporting can be specifically documented with the findings of the stewardship theory and the stakeholder theory. The empirical findings show that the quantitative adoption index is at a low level in the years under review and that the fundamental requirements of GAS 20 for management reporting on opportunities and risks are not met. It is especially striking that the required balance between risk and opportunity reporting is largely not met by the German banks. The clear focus of their reporting is on risks. The evaluations of the disclosure indices confirm these results—the Risk Disclosure Index has consistently remained at a high level in the years under study while the Opportunity Disclosure Index is at a very low level with a rising trend. The extent of risk reporting correlates positively with the size of banks and negatively with the debt ratio of banks in all the years examined. No clear economic determinants could be identified for the opportunity report. The evaluation of the questionnaires and the performed interviews highlights the social determinants ‘interest of the shareholder’, ‘uncertainty’, and ‘intention’ in particular. It could not be clearly proved that the opportunity report is used as a corporate government instrument. Potential Implications - The empirical findings have various implications for the main stakeholders of German banks. Based on the results, the banks can question their own reporting patterns, investors can better estimate the scope of management reporting, and the standardsetters can receive information regarding possible adjustments to GAS 20. Originality - No prior research has been conducted on the economic and/or sociological determinants of risk and opportunity disclosure in German banks, making this the first study to investigate the determinants of risk and opportunity disclosure in the context of Germany. In this context, a concrete catalogue of criteria based on GAS 20 for risk and opportunity reporting by German banks has been drawn up and tested for the first time. In the second and third parts of the study, the quantitative and qualitative survey methodology were used for the first time by means of a systematically prepared questionnaire and interviews to analyse, in particular, social determinants on the extent of opportunity reporting. A qualitative investigation of the influence of various determinants on the scope of the management reporting of German banks is not yet available.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available
Keywords: HB Economic Theory ; HG Finance