The role of the societal context in establishing trust within the UK risk disclosure regime

Purpose Trust is one of the key governance mechanisms known to facilitate the role of the regulator in enforcing adequate risk reporting. Research provides evidence on inconsistencies within the corporate disclosure regulatory regime and calls for studies to explore how policymakers enhance trust among stakeholders to encourage engagement in corporate risk disclosure. This study aims to contribute to the academic literature by providing evidence on the different trust relationships and identifies key issues faced within the risk disclosure regulatory regime. Design/methodology/approach Using a qualitative approach, this study conducts semi-structured interviews with preparers, regulators, investors and analysts. Findings Participants report coordination problems among the regulators that create incoherence and lead to huge costs of compliance. Users report that there are some disclosures made by the preparer, as part of a bank’s regulatory reporting, that may not be provided within the statutory reports potentially leading to a market inefficiency. Although users demonstrate an understanding that such information may be commercially sensitive, they emphasise the need to be able to trust that the regulator is on top of ensuring that banks are financially sound. Preparers highlight that they may be reticent to disclose information with little to no evidence to avoid misinterpretations. This information may be provided to the regulator once they trust it would be kept confidential. Originality/value The study enriches the literature on risk disclosure with informative insights into the establishment of trust within the UK banking risk disclosure regime. Moreover, the findings are based on actual data on the preparation and usage of such reports that reflect real life journeys.