Risk Narrative Disclosure Strategies Risk Narrative Disclosure Strategies to Enhance Organizational Legitimacy : Evidence from UAE Financial Institutions

The article examines how Risk Narrative Disclosures (RNDs) are utilized by United Arab Emirates (UAE) listed financial institutions. It uses legitimacy theory to link UAE stakeholder expectations to RNDs published by UAE financial institutions. Drawing on institutional theory and impression management perspectives of corporate social legitimacy, the article explores how UAE stakeholders create societal expectations related to risk disclosures and, at the same time, reveals how managers utilize RNDs to gain, maintain and restore the social legitimacy of their organizations. The article relies, primarily, on the analysis of the content of textual risk data published in the annual reports of 23 UAE financial institutions listed in Abu Dhabi and Dubai securities market. It also analyzes the contents of the UAE legislations, newspaper articles and professional bulletins as a proxy of the country's societal expectations related to risk reporting. The article findings show that UAE financial institutions utilize ‘assertive' and ‘defensive' disclosure tactics to gain, maintain and restore their social legitimacy. The article is one of the first studies to examine how financial institutions, operating in emerging economies, use narrative disclosures to pursue organizational legitimacy