Shareholder activism and accounting reporting complexity

Mai Dao and Hongkang Xu

Journal of Accounting Literature, 2023, vol. 46, issue 1, 121-149

Abstract: Purpose - In this paper the authors aim to examine whether shareholder activism is associated with accounting reporting complexity (ARC). Design/methodology/approach - The authors employ ordinary least squares (OLS) and a sample of 19,530 firm-year observations (representing 3,377 unique firms) over the 2010–2019 period to test the prediction. Findings - The authors find that firms with shareholder activism provide more complex accounting reporting. Further, both types of activism (including Concern & Dispute and Control & Discussion) are positively associated with ARC. The authors also find that the association between shareholder activism and ARC is more pronounced when the firms have a higher level of litigation risk and a higher proportion of institutional ownership. Collectively, the findings suggest that firms with shareholder activism may be under more pressure to disclose more accounting items, leading to more complex accounting reporting. Originality/value - The study may be informative to regulators considering the costs and benefits of shareholder activism in financial reporting.

Keywords: Shareholder activism; Accounting reporting complexity; Corporate policies (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jalpps:jal-11-2022-0122

DOI: 10.1108/JAL-11-2022-0122

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