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Is risk disclosure in banks’ pillar 3 reporting informative? Analyzing tone consistency with annual reports

Anne d’Arcy et al.

Journal of Accounting and Public Policy2026https://doi.org/10.1016/j.jaccpubpol.2025.107395article
AJG 3ABDC A*
Weight
0.50

Abstract

This study evaluates the informativeness of tone in risk disclosures by examining tone (in-)consistency between two key sources of bank reporting: regulatory reports under the Pillar 3 framework (P3) and annual reports prepared according to IFRS. Using a sample of European banks from 2008 to 2021, the results show that qualitative risk disclosures in P3 reports are informative for assessing banks’ current capital adequacy and serve as a benchmark to evaluate the signals in annual reports. When the tone of P3 reports shifts positively, a consistently positive tone change in annual reports enhances the informativeness of P3 disclosures. Conversely, when the tone of P3 reports shifts negatively, an inconsistent optimistic tone change in annual reports obfuscates the informativeness of P3 disclosures. These effects are influenced by the 2015 standardization of P3 reporting and the supervision role of central banks. The findings provide the first evidence of the incremental role of narrative P3 reporting in enhancing overall disclosure informativeness beyond annual reports, highlighting asymmetric signals of tone (in-)consistency across different channels of risk disclosure.

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https://doi.org/https://doi.org/10.1016/j.jaccpubpol.2025.107395

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@article{anne2026,
  title        = {{Is risk disclosure in banks’ pillar 3 reporting informative? Analyzing tone consistency with annual reports}},
  author       = {Anne d’Arcy et al.},
  journal      = {Journal of Accounting and Public Policy},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1016/j.jaccpubpol.2025.107395},
}

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Is risk disclosure in banks’ pillar 3 reporting informative? Analyzing tone consistency with annual reports

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.