Communicating in turbulent times: What shapes geopolitical risk disclosure?

Purpose In a context characterized by increasing geopolitical instability and growing stakeholder demand for transparency, firms are increasingly expected to communicate their exposure to externally driven risks. Despite the growing relevance of geopolitical risk, limited research has examined how companies disclose such information and what factors drive these practices. Drawing on the managerial perspective of stakeholder theory, this study investigates the determinants of geopolitical risk disclosure (GPRD) among European listed firms. It focuses on key firm-specific factors – namely firm size, financial leverage, Internet visibility, and environmental sensitivity – to examine how these attributes shape corporate transparency in relation to geopolitical risks. Design/methodology/approach The empirical analysis is conducted on a sample of 170 firms included in the MSCI Europe Index. The extent of GPRD is measured through manual content analysis of 2023 sustainability reports, based on a disclosure index developed from prior literature and established geopolitical risk dimensions. Using an Ordinary Least Squares (OLS) regression model, this study examines whether firm size, financial leverage, Internet visibility, and environmental sensitivity influence the extent of GPRD. Findings The results indicate that the overall level of GPRD is moderate, suggesting that, despite the increasing relevance of geopolitical risk, firms still provide a limited amount of related information in their sustainability reports. In addition, firm size, Internet visibility, and environmental sensitivity are positively and significantly associated with GPRD, while financial leverage does not exhibit a statistically significant relationship. Originality/value This study contributes to the literature by extending research on geopolitical risk beyond its economic and financial implications, focusing on its disclosure dimension. It also advances the literature on corporate and risk disclosure by isolating the geopolitical component and identifying its key determinants. Furthermore, it enriches the application of stakeholder theory by providing empirical evidence on the relevance of its managerial perspective in explaining firms' disclosure behavior in the context of externally driven risks.