Do Climate-risk Disclosures Matter for Accounting Behaviour? Evidence on Conservatism from Swedish IFRS Firms

Sammanfattning

Climate-risk disclosures in financial statements have become increasingly prevalent in recentyears, reflecting growing regulatory and stakeholder pressure. However, the extent to which suchrisks are incorporated into firms’ accounting judgments remains unclear. This study examineswhether climate-risk disclosures in financial statements are associated with accountingconservatism among Swedish firms listed on Nasdaq Stockholm over the period 2023-2024. Twohypotheses are developed to examine whether the presence of climate-risk disclosures and thequality of such disclosures are positively associated with accounting conservatism using twoaccrual-based measures. The results provide no support for a positive association between thepresence of climate-risk disclosures, however, a significant and positive association was foundbetween disclosure quality and accounting conservatism. These findings are interpreted throughstakeholder and signalling theory, suggesting that the presence of climate-risk disclosures reflectsstakeholder pressure and may be predominantly narrative or symbolic. In contrast, higher-qualitydisclosures are more likely to indicate that climate-related risks are incorporated into firms’accounting judgments. Overall, the study contributes to the scarce literature on climate-riskdisclosure in financial statements and its connection to reporting practices by providing earlyevidence on how recent regulatory developments influence financial reporting behaviour in aSwedish context. These findings further highlight the importance of disclosure quality and itsrole in helping stakeholders determine a firm's ability to acknowledge risk and uncertainty in itsreporting practices.