A Suggested Model for Measuring the Impact of Risk Voluntary Disclosure on the Stock Returns and Cost of Finance

An applied Study on the Saudi’s Securities Listed Companies

Abstract

The paper aims to examine the impact of the voluntary and timely content risk disclosure on stock returns and the cost of debt, for a sample of 90 non-financial Saudi companies listed on the Saudi Stock Exchange companies during the period from 2012 to 2016. The author used the event approach to test the impact of voluntary risk disclosure on stock returns. The author found out that there was a significant effect of the disclosure of voluntary risk information on stock returns. The multiple linear regression model is used to determine the null hypotheses of ​​voluntary risk disclosure. It was found out that voluntary risk disclosure has an intangible impact on stock returns and the cost of financing. In conclusion, voluntary disclosure of business and strategic risks has a significant impact on stock returns, while voluntary disclosure of strategic risks, apart from other types of risks, has an intangible impact on the cost of financing. On the other hand, late financial reports have a negative impact on the relationship between the voluntary content risk disclosure of stock returns and financing costs.