ABSTRACT Mandatory disclosures related to company risk provide investors with valuable information. However, textbooks lack detailed coverage of risk disclosure requirements. This Learning Strategy provides instructors with turnkey classroom materials to introduce students to Item 1A risk disclosure requirements and to discuss academic research on risk disclosures. In an optional assignment, students practice (1) accessing filings on EDGAR and reading and interpreting risk disclosures, (2) using software to conduct text analysis on risk disclosures (any software can be used; the example implementation is presented using Python), and (3) evaluating how audit committee characteristics are related to risk disclosures. The materials can be tailored for undergraduate or graduate-level accounting information systems and auditing courses that discuss business risk or risk management; financial accounting and analysis courses that discuss financial statements and disclosures; and stand-alone data analytics courses. JEL Classifications: M4; M40; M41; M49.
Bailey et al. (Fri,) studied this question.