The impact of stakeholder management on restatement disclosure transparency

Brian Hogan and Colin Reid

Review of Accounting and Finance, 2022, vol. 21, issue 3, 174-203

Abstract: Purpose - The purpose of this paper is to explore the impact of a particular firm’s stakeholder orientation, particularly employee orientation, on corporate communications with stakeholders concerning financial irregularities. Design/methodology/approach - This study explores the impact of a particular firm’s stakeholder orientation, particularly employee orientation, on corporate communications with stakeholders concerning financial irregularities. Using a sample of 762 firm restatements, the authors separate their observations by disclosure transparency (high or low transparency of disclosure) and use logit regressions to examine whether companies with stronger employee orientation make more or less transparent restatement disclosures. Findings - The findings show that higher levels of investment in employee orientation are associated with less transparent restatement disclosures. Further, examining a subsample of restatements in which managers may have greater discretion over how a restatement is disclosed confirms this finding. However, supplemental tests show that increased external monitoring may mitigate these effects. Practical implications - The findings provide support that other stakeholders, such as shareholders, should weigh the potential pros/cons of management investments in corporate social responsibility (CSR). These concerns are more important now as firms continue to embrace a stakeholder-focused model of management which allocates resources to numerous stakeholder groups. Originality/value - This paper extends the growing body of research that assesses the impact of CSR on firm outcomes (Kimet al., 2012; Guoet al., 2016; Hmaittaneet al., 2019). Further, this paper contributes to the disclosure transparency literature by finding an association between CSR investment levels and the manner in which a firm discloses a restatement.

Keywords: Stakeholder management; Restatements; Firm disclosures; Corporate social responsibility (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:rafpps:raf-04-2021-0112

DOI: 10.1108/RAF-04-2021-0112

Access Statistics for this article

Review of Accounting and Finance is currently edited by Nawazish Mirza

More articles in Review of Accounting and Finance from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().