We empirically examine the economic effects of disclosure focusing on Japanese textual business risk disclosures. A unique feature of this study is the construction of a new risk measure, enabling us to directly isolate economic disclosure effects from fundamental value effects. We find that on average about 40 percent of total risk components are due to the effects of disclosure (i.e., 60 are from fundamental value effects). We find that there is a positive association between the number of items and the text (number of words and/or sentences) within business risk disclosures and our new risk measure. This indicates business risk disclosures change investors` risk perceptions (i.e., information risk) and thus results in increasing the information component with the cost of capital. We also find that disclosure of firm-specific business risks increases information risk, but interestingly, decreases fundamental risk. This indicates, as pointed out by Lambert et al. (2007), that “indirect effects” affecting a firm`s real decisions may exist. Overall, our empirical evidence strongly rejects the criticism that business risk disclosures suffer from being boilerplate information.