Disclosure quality and quantity

The Dutch pension fund sector is an interesting, dynamic research field on which this thesis has focussed by providing an answer to the following main research question: “To what extent have the quantity and quality of investment risk disclosures in the financial statements of Dutch pension funds increased since the financial crisis and does pension fund size result in differences in disclosure quantity and quality?” Scientific research might contribute to increasing disclosure quality and help reduce problems with information asymmetry and agency conflicts that occur also in the pension sector. Buzby (1975) and Cooke (1989) concluded in their research that the larger a company, the higher the disclosure quality, which will be subject of research in this thesis as well. The financial crisis started in the United States in 2007 and spread all over the world since then (Dabrowski, 2010). This thesis aims to research if the disclosure quantity and quality of investment risks have increased since the financial crisis as well. Both disclosure quantity and quality will be researched, following Beretta and Bozzolan (2004) who emphasized to take into account not only “how much” (disclosure quantity), but also “what” and “in which way” (disclosure quality) is disclosed. After an extensive selection procedure, content analysis and a disclosure index study have been chosen as research methods. To collect the data, a checklist has been applied to the financial statements of 25 Dutch pension funds. First of all has been tested if the financial crisis was a topic in the financial statements at all and if the disclosure quantity regarding financial crisis was bigger for larger than for smaller pension funds. This was indeed the case. Furthermore could be concluded that the financial crisis had resulted in a bigger disclosure quantity of investment risks. It was remarkable that indeed the larger pension funds disclosed the investment risks more frequently than smaller pension funds before the crisis, but this was not the case anymore after the start of the financial crisis. Regarding the asset category bonds could be concluded that the quality of investment risk disclosures has increased since the financial crisis which was to a lesser degree the case with real estate. With regard to the disclosure quality of investment risks, pension fund size resulted only partially in higher disclosure quality for bigger pension funds. However, like many other researches this research has his limitations as well. An important limitation is that there are possibilities for pension funds to voluntarily disclose information to reduce problems with information asymmetry and agency conflicts. These possibilities, such as newsletters, have not been taken into account as part of this research and are an interesting subject of research for further investigation.