How social pressure anomie influences shadow accounting functions: the role of voluntary disclosure development in Iran

Abstract

Purpose

This article aims to contribute to the accounting knowledge literature by presenting the framework of shadow accounting functions (SAF) and investigating the effect of stakeholders’ pressure anomie (SPA) on it.

Design/methodology/approach

This study adopted a mixed, both inductive and deductive approach to develop an integrated framework, validate its practicability and verify its effectiveness in selected manufacturing firms listed on the Tehran Stock Exchange. In developing the framework and implementation procedure, the study employed an exploratory data collection (qualitative) approach to review the phenomenon of shadow accounting functions. Then, in the second phase, this study tested the research hypothesis through a partial least squares process. The population of the study is made up of all financial managers and heads of the accounting departments of capital market companies in Iran. Presently, there are 185 companies (TSE). From this, a sample of 100 companies was selected, which are all on the Tehran Stock Exchange.

Findings

Based on the mixed method of this study, the result in the qualitative part provides the shadow accounting framework of the existence of three categories; there are six components and 37 themes during 12 interviews. In the quantitative section, it was also determined that social pressure anomie has a positive and significant effect on shadow accounting functions.

Originality/value

So far, it is rare to find preceding studies that proposed, validated and practically tested an integrated shadow accounting framework within the context of manufacturing industries. Thus, the authors understand that this is the very first research focused on the development of the framework for manufacturing industries to be competitive and could help managers, institutions, practitioners and academicians in the perception of social values expected by stakeholders.

Citation

Zamanianfar, L. and Abdoli, M. (2024), "How social pressure anomie influences shadow accounting functions: the role of voluntary disclosure development in Iran", Asian Journal of Accounting Research, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/AJAR-08-2023-0269

1. Introduction

Contemporary neoliberalism has taken its shape quietly, but its rationality is now ubiquitous. While contextual differences remain, neoliberal rationality is now firmly embedded within the traditional institutions of democracy (Brown, 2015), changing our workplaces, our schools, and our hospitals. It impacts our perception of self (Cooper, 2015) and it orients the future of internet-driven participatory spaces (Zuboff, 2019). It has also influenced the conceptual framing of accounting, and in doing so, the role and purpose of both financial and management accounting information have been transformed to serve an increasingly narrow set of information needs for participants in capital markets (Zhang and Andrew, 2014; Chiapello, 2017). In the face of neoliberalism’s hegemonic status, some accounting researchers have started to explore new ways to disrupt traditional forms of reporting that reinforce and intensify the exploitation of people and the planet (Tregidga, 2017). These efforts attempt to re-politicize the role of accounting, suggesting both its current status as an active agent in the production of inequality (Sikka, 2015) and its potential as a politically potent source of alternative accounts of power e such as shadow accounting1 (Dey et al., 2015). With Context, this Study follows the research of Andrew and Baker (2020) that focuses on the CableGate Documents Published by WikiAaks in 2010 considers the Role Shadow Accounts, craft From Leaks, Might Play in the Disruption of Neoliberal Norms and the “Construction of a More Democrat (Mouffe, 2018).

Shadow accounting is considered one of the emergent concepts in the direction of developing accounting knowledge interactions with social contexts, a mechanism to respond to social movements formed in societies, which tries to develop the hidden angles of accounting functions to increase social accountability (Manetti et al., 2021; Catchpowle and Smyth, 2016). In other words, shadow accounting is a part of the implementation procedures of voluntary disclosure of information that helps the stakeholders to be more aware. The approach that companies consider in this area is beyond adherence to accounting requirements and standards and they try to provide financial decision makers with a greater volume of performance news through voluntary disclosure of information. In addition, shadow accounting is considered a symbol of CSR-based behavior that improves the credit standing of companies. The shadow accounting philosophy based on CSR represents effective information for social functions such as the environment and leads to the creation of integrated information norms in the entire market.

Dey et al. (2015) in expanding this concept stated that shadow accounting is a function of social monitoring and NGO groups that, to restore the social rights of shareholders, put pressure on companies and accounting units to explain the needs arising from social contexts in disclosing information through this style of accounting. On the other hand, Tregidga (2017) analyses the shadow reporting of a social movement in New Zealand as a multi-perspective case of shadow accounting. The study applies Foucault’s power/knowledge perspective and its relationship with the truth, investigating whether shadow accounting can be an instrument in effectively “speaking truth to power” or counterbalancing power. According to this vision, accounting in modern society affects the discourses that are accepted as true and help us achieve the social norm in information disclosure. Therefore, as Tregidga (2017) states, shadow accounting is a way to promote corporate social responsibility (CSR) and corporate legitimacy. To achieve such a process, accounting certainly needs reinforced norms of social expectations to give a new identity to the expected values in different areas such as the environment.

Anomie of social pressure is considered a kind of normative reconstruction due to functional abnormalities in the dysfunctional market. In fact, in an inefficient capital market, when accounting procedures are one-sided in information disclosure and no traces of social values are observed in corporates' reporting, tensions among shareholders will gradually increase due to pressure on companies (Rashidi Baqhi, 2018). Because reporting standards may necessarily cover all optional aspects of companies in disclosing information. Therefore, the occurrence of anomie arises in the form of social pressure, and over time, accounting functions cover more comprehensive social goals in parallel with the main procedures of classical accounting. Stakeholders' social pressure can come in different forms, such as demands for transparency and accountability, pressure for socially responsible business practices, and expectations for sustainable growth (Mafrolla et al., 2022). For instance, shareholders may refuse to buy shares from corporations that do not disclose their impact on the environment, while investors may only invest in companies that demonstrate good corporate social responsibility practices (Rui and Lu, 2021). The social pressure from stakeholders, therefore, creates an imperative for organizations to adopt social accounting practices to ensure that they remain sustainable, competitive, and accountable. Shadow accounting enables corporates to measure, assess, and report on their social and environmental performance, which helps to meet stakeholders' expectations and improve transparency and accountability (Ying et al., 2022). By doing so, corporates can build trust with their stakeholders, enhance their reputation, and mitigate social and environmental risks. Thus stakeholders' social pressure is a key driver for the adoption and implementation of social accounting practices in corporates. As such, corporates that are socially accountable are more likely to thrive and succeed in today’s socially conscious business environment.

The importance of conducting this study in Iran’s capital market is since, on the one hand, with the increase in environmental pollution, the possibility of the loss of plant species and animal diversity has become one of the concerns of NGOs in Iran, and on the other hand, The changes of investors' approaches in the evaluation criteria of companies' performance from merely quantitative to qualitative. On the other hand, in line with the empirical importance of this study, it should be stated, to the best of our knowledge, no prior studies have tested the relationship between social pressure anomie and shadow accounting functions of the firm and similar existing studies have limitedly examined each of these variables separately. For example, recent studies such as Shi and Tsai (2022), Singh et al. (2022), and Schäfer et al. (2022) investigated the pressure of stakeholders and its effect on aspects such as the performance of performance enterprises; green innovation, and risk management practices, but no prior studies has investigated the effect of social pressure anomie and shadow accounting functions.

Also, theoretically, it should be stated, that shareholder pressure and shadow accounting have significant theoretical importance in the context of Iran’s capital market. Shareholder pressure is a phenomenon that occurs when shareholders demand action from a company’s management or board. This pressure can be exerted in various forms such as through shareholder resolutions, proxy voting, or direct communication with the management. The theoretical importance of shareholder pressure lies in its potential to facilitate accountability and improve corporate governance in companies. Shadow accounting, on the other hand, is the practice of measuring and reporting on social and environmental performance beyond financial metrics. This practice is based on the concept that companies have a responsibility beyond their economic earning to also consider the social and environmental impact of their operations. The theoretical importance of shadow accounting lies in its potential to facilitate transparency and accountability and to foster responsible business practices. The discrepant outcomes in this field of research could be due to the lack of studies considering the sociological context, which has not been able to lead to the creation of a unified social norm in the development of voluntary and social information disclosure by firms. Using multiple theoretical lenses from different streams of the literature, this article has the potential to add sociological insights through shadow accounting to accounting knowledge (Salvato and Moores, 2010) and to help reconcile previous contradictory empirical findings.

Finally, in terms of implications, it should be stated that the results of this study can help policymakers, standard-setters, and capital market legislators with the recognition resulting from the identification of the dimensions of shadow accounting, which strengthens the ethical functions; Social and cultural accounting will lead to more dynamic interaction between firms and stakeholders in social contexts. Therefore, based on that, incentive policies for the normalization of behavioral and qualitative accounting values for the disclosure of social information with higher quality can be predicted as the result of this study.

In addition, the driving motivation of this study is the presentation of a framework of shadow accounting functions, a problem that has caused this emerging phenomenon to generalize to the accounting knowledge base, currently facing a challenge. Because the ever-increasing changes in social expectations of accounting knowledge have institutionalized the need to recreate and create such concepts in this context today more than in the past. For this reason, this study tried to combine methods of qualitative and quantitative methodology, while presenting an integrated framework, in the real world, to examine its functions in terms of social pressure anomie. Therefore, according to the explanations provided, the main research question is whether Social Pressure Anomie has a significantly negative effect on Shadow Accounting Functions?

Therefore, the purpose of this study is to effect the Social Pressure Anomie on Shadow Accounting Functions. To achieve this goal, this study, focusing on grounded theory, while studying theoretical literature, tries to create a framework of Shadow Accounting through methodological support that can improve the credit standing of companies among shareholders. Therefore, during the interviews, a conceptual model is presented, and then by measuring the reliability of the axes identified in the conceptual model through the fuzzy Delphi process, it is explained in the Iranian capital market companies.

2. Literature review

2.1 Shadow accounting

Within the context of a society awash with new forms of media and powerful technologies, shareholders react to the constraints imposed by companies through neoliberal rationality. One of the more radical examples of this pressure is the large-scale anonymous leaking of documents from within various firms for shareholders (Andrew and Baker, 2020). As a radical in information disclosure, leaks not only make new information available for public debate but the act of leaking aims to strengthen the social status of companies in front of the stakeholders (Brevini et al., 2013; Sifry, 2011). In recent years, leaks such as the Panama Papers and Cablegate have provided rich, detailed, and searchable snapshots of the internal machinations of state and corporate power and this has provided fertile ground for a new generation of counter-hegemonic activity, including the development of new forms of shadow accounting. Applying this to accounting, leaks can be used to challenge the coherence of hegemony in ways that contribute meaningfully to the radical and democratizing ambitions of the shadow accounting project, thereby offering a powerful alternative to the orthodox routines that surround both statutory and voluntary reporting practices (Tregidga, 2017). While prior research in shadow accounting has helped build an understanding of the institutional (Dey et al., 2015), discursive (Tregidga, 2017), and material consequences of hegemony on the planet and society (Milne and Grubnic, 2011), the lack of a reference theoretical framework in this field is still felt. In completing this theoretical dispersion, it is sufficient to refer to the studies in this field.

For example, Dai (2009) considers shadow accounting as a management information system that institutionalizes expectations and changes arising from social needs in accounting functions and improves, through strategic decision-making methods, the social arenas in conflict with the firms' practices. Moreover, Dey et al. (2015) separate shadow accounting into 7 links, which can be seen in Figure 1.

For example, shadow accounting in link with the environment seeks to reduce emissions by strengthening ethical values in the accounting profession rather than through requirements in the financial reporting or shadow accounting in link with norms, on the importance of the integration of the social functions of accounting from the point of view of ethics; Culture; It refers to social responsibility and other innovative aspects that can control conflicts caused by social differences. On the other hand, shadow accounting considers the source of social expectations dependent on the interaction with social groups or NGOs, which can generalize the needs of the market within the firm and even industries, so that sustainable development becomes possible (Lisowsky and Minnis, 2020). Also, shadow accounting is established by default in an economic system with an efficient mechanism, which seeks communication effectiveness with stakeholders; Informational symmetry, and maintaining equality. Furthermore, shadow accounting helps regulatory institutions and other organizations formulate capital market policies to develop ethical and responsible performance criteria for firms (Liu et al., 2022). Finally, shadow accounting acts as an information system that enters the data flow as input into the system and coordinates accounting functions to respond to changes through specialized capacities, and inclusive social processes. In this case, the output of the system strengthens the social satisfaction of the stakeholders (Pellegrini et al., 2022). In the following, to expand the research questions, an attempt is made to justify it through the review of the conducted research in Table 1.

By screening different aspects of similar research, it can be seen that the majority of prior research has been case-based and the dispersion of accounting dimensions caused this study to seek to provide a suitable conceptual framework for the shadow accounting phenomenon through ground theory. In addition, as shown in terms of the analysis method in Table 1, prior research has not identified conceptual themes, components, and categories through coding. Therefore, this study seeks to expand the concept of shadow accounting in the context of the study with the interview tool and the three stages of open, axial, and selective coding.

2.2 Social pressure anomie and shadow accounting functions

Paralleling society’s increasing interest in the CSR activities of companies (Stuart et al., 2023), the accounting literature shows an increase in research studies investigating shadow accounting in recent years [1]. However, the pace of increase has been modest in the specific area of disclosure quality (Ma, 2019). Due to the voluntary nature of CSR disclosure, much of the early research focuses on factors associated with the decision to disclose (Keune et al., 2017). Over time, researchers have accessed different but related theories to explain companies’ motivations for voluntarily disclosing CSR information, including but not limited to legitimacy theory (Park et al., 2023). Within the extensive social and environmental accounting literature (Thomson, 2007) there are reports of a particular form of social accounting produced by external organizations, including campaigning NGOs, on their representation of the social and environmental impacts of others (see, for example, Moerman and Van der Laan, 2015; Gallhofer et al., 2006; Dey, 2007). The intended audience for these reports was not simply the organization associated with the problematic impacts but also included political institutions, the media, and sections of the general public (Cooper et al., 2005; Collison et al., 2007). Given that the reports attempted to challenge, problematize, and legitimate those currently in a dominant position of power, implicitly we understand that these accounts will be prepared by, or on behalf of, less powerful social groups. They may therefore be thought of as an “accounting for the other, by the other” (cf. Shearer, 2002), or more concisely, “shadow accounts” (Dey, 2007). Shadow accounting can be viewed as a parallel procedure in accounting that measures, creates, makes visible, represents, and communicates evidence in contested arenas characterized by multiple, often contradictory reports, prepared according to different institutional and ideological rules. Any evaluation of shadow accounting should recognize this contest for power and the intention to influence decisions. From a theoretical perspective, shadow accounting possesses significant emancipatory potential (Shenkin and Coulson, 2007; Bebbington and Thomson, 2007). At the same time, however, there are also concerns over how shadow accounts problematize, and the intention and intervention strategies of shadow accountants. Shadow accounting is a voluntary activity and shadow accountants are self-selecting individuals or organizations seeking to bring about change in line with their belief structure, which need not be emancipatory (Dhaliwal et al., 2011; Dey et al., 2015).

In other words, although shadow accounting may be considered in conflict with their business goals and profitability, the development of this practice of accounting can be considered as a reinforcement of the social values of accounting in the disclosure of comprehensive and voluntary information (Qamrussaman et al., 2021). One of the external drivers for promoting such a practice in accounting is social pressure in the form of shareholder pressure; standard-setters and NGO groups, often by forming campaigns in media channels and social networks, want to influence the greater role of accounting in focusing on social values (Sisaye, 2021). But the problem here is to start any social expectation of inclusiveness, creating anomie to shape the reference norms of that problem. In other words, when a social value that includes collective benefits is not taken into consideration by the institution unit or business enterprise and there is no norm for it, anomie is created by social pressure to achieve harmony and homogeneity (Khaki et al., 2021). In simpler words, firms with shareholder activism may be under pressure to disclose more accounting concepts due to the disciplinary/monitoring effects of shareholder activists. The increasing disclosure of accounting concepts in turn results in higher accounting reporting complexity for firms with shareholder activism. Indeed, the disclosure demand of shareholder activists may force firms with shareholder activism to disclose more accounting concepts and thus more accounting reporting complexity (Dao and Xu, 2024). Based on this, shadow accounting can be considered as a consequence of the formation of a kind of abnormality that makes possible the development of social values through an integrated norm (Walker, 2008).

Social Pressure Anomie refers to the pressure that comes from a lack of social norms or the breakdown of social norms in a society (Pillay et al., 2023). Anomie is a state of normlessness or a lack of the usual social or ethical standards in a societal context. This abnormality arises in the capital market, which can be caused by a range of inefficient capital market structures to the lack of transparency in the company’s communication with shareholders (Guo et al., 2020). Under such conditions, this can create pressure on companies due to the herding behavior of shareholders. The absence of clear social rules can lead to confusion, isolation, and a sense of insecurity among shareholders. Examples of social pressure anomie can include the increase in investor sentiment. In the context of the Tehran Stock Exchange, social pressure anomie could refer to the feeling of uncertainty and confusion that investors may experience when faced with complex financial instruments, unfamiliar regulations, or rapidly changing market conditions (Dehghani and Fathi, 2021). In such an environment, investors may struggle to make informed decisions and may be more susceptible to the influence of social pressures such as market hype, herd mentality, and insider trading. One specific example of Social Pressure Anomie in the Tehran Stock Exchange is the phenomenon of “group investment,” where individuals invest their money together in large groups, often based on shared social ties or common interests. While this practice can provide a sense of social support and shared decision-making, it can also lead to groupthink and a lack of independent critical thinking, which can result in poor investment decisions. Overall, the presence of social pressure anomie in the Tehran Stock Exchange can make it difficult for investors to navigate the complex world of finance and may lead to suboptimal outcomes for both individuals and society as a whole (Yoonm and Oh, 2022).

One of these studies that has recently been released in this field in Iran is the study of Sharif Khafri (2022). This study investigated the impact of social pressure anomie on corporate citizen reporting. the result is a reflection of the fact that corporate citizen reporting as a result of the norms formed by the anomie of social pressure can be a set of humanitarian actions; Charitable contributions and other forms of committed actions of the corporate towards the social environment and stakeholders. Besides Khaki et al. (2021) reviewed, The Effect of Social Pressures Anomie on Aggressive Financial Reporting. In this study, the results showed that the social pressures of the stakeholders have a positive and significant effect on bold financial reporting. In addition, Barani et al. (2022) studied The Effect of Social Pressure and Aggressive and Conservative Risk Appetite on Decisions in Providing Financial Reporting. The results showed that obedience social pressure and aggressive risk appetite have a positive and significant effect on incorrect decisions in providing financial reporting. Other results showed that conformity social pressure and conservative risk appetite have a negative and significant effect on incorrect decisions in providing financial reporting. All the presented research shows that the emergence of anomie is the basis for the formation of a coherent norm of stakeholders' pressure on companies to gain their trust by disclosing voluntary information. The review of international research shows that there has not been much desire to investigate the social anomaly in the capital market and its effect on shadow accounting. Therefore, this study can increase knowledge in the context of accounting and capital market studies. As an example, we can refer to the study of Burns and Jollands (2020) under the title of “Acting in the Public Interest: accounting for the Vulnerable”. This study highlighted the need to: take a principles-based approach in defining the vulnerable, undertake an accounting that reflects the lives they value, acknowledge that there are different ways for addressing these issues, recognize that an absence of perfect numbers should not become a barrier to action, and that accounting for the vulnerable is one way that the accounting profession may discharge their public interest roles. Therefore, according to the explanations provided, the following hypothesis can be formulated for testing through partial least squares after presenting the framework of shadow accounting functions:

H1.

Social Pressure Anomie has a significantly negative effect on Shadow Accounting Functions.

3. Methodology

This section outlines and discusses the methodology applied to conduct this research. Generally, research is conducted either to propose knowledge (inductive approach using qualitative study) or to validate knowledge (deductive approach using quantitative study). Both types of research are equally important (Bryman, 2008). This study adopted mixed, both inductive and deductive approaches to develop an integrated framework, validate its practicability, and verify its effectiveness in selected manufacturing firms listed on the Tehran Stock Exchange. In developing the framework and implementation procedure, the study employed an exploratory data collection (qualitative) approach to review the phenomenon of shadow accounting implementation in the literature with the context of unique techniques, drivers of social and technical factors (companies, institutions, and government), and its effect in operational, innovation and business performance results of manufacturing industries added as sustainable competitiveness measuring instrument dimension as presented in section finding.

Besides, to further investigate the practicability of an integrated framework, a survey was selected as the most appropriate research technique for validating the framework and implementation procedure. In this case, a quantitative data collection approach, questionnaire in particular was employed as it measured the workability of the framework and implementation procedure. The questionnaire contains 6 questions about the proposed framework and 14 questions regarding social pressure anomie. The questionnaire was surveyed by 399 respondents from company managers and consultants to confirm the workability of the integrated framework and implementation procedure to capture any limitations and to review and present a revised version as described in the findings section.

Furthermore, to examine the effectiveness of the integrated framework, document review was designated as an appropriate research technique for verification of the influence of the integrated framework. In this case, empirical (quantitative) and non-empirical (qualitative) exploratory data collection method was used as they could identify the implementation process and gain quantifiable results. So, the annual and technical reports gained from 100 manufacturing companies were reviewed to confirm whether the execution of the shadow accounting (SA) framework results in achieving performance objectives or not as presented in section (6).

Given that, the subsequent framework and implementation procedure development research methodology (Figure 2) is developed, and it illustrates the approach adopted in the development, validation, and verification of the proposed framework. The sampling selection of this research is non-probability sampling and purposive sampling. The selection of participants and their characteristics are based on the purpose of the research. Since the research aimed to develop and validate a universal framework, a survey perception-based cross-case study was conducted. This entailed studying companies in a range of industries with different. Presently, there are 185 companies (TSE). From this, a sample of 100 companies was selected through systematic screening which are all in the Tehran Stock Exchange. Following this sampling method, the criteria of Table 2 are presented to reach the sample companies.

Since this study is on social pressure anomie (ASP) and shadow accounting (SA) in Iran, the population of the study is made up of all financial managers and heads of the accounting departments of capital market companies. Presently, there are 185 companies (TSE). From this, a sample of 100 companies was selected which are all in the Tehran Stock Exchange. For this purpose, the following formula is used for an infinite population:

n=Zα22pqd2

In this formula.

• n = Number of samples

• Zα22 = Standard normal value is 1.96

• pq = The ratio of the variable attribute is 0.5

•  d2 = The probability of measurement error is equal to 0.05

Due to the above relationship, a sample size of 384 people was obtained to increase the validity of the study, 450 questionnaires were randomly distributed among auditors and finally, 399 questionnaires were received and used as a basis for statistical analysis.

A questionnaire survey was adopted to obtain primary data for this study. This was obtained from the respondents through a questionnaire that captured the demographic data of the respondents and their opinions concerning the study objectives.

Based on the nature of the study methodology, which was of a mixed type, to collect data in the qualitative analysis section, deep interviews (open-ended interview plan) with an average time of one hour were used. It is important to mention that the reason for using in-depth and unstructured interviews was that the concept of sustainable intellectual capital reporting did not have adequate conceptual coherence due to the lack of a theoretical framework, and based on the interview process, it was tried to create consistency in the content and nature of the concept under consideration in sustainability accounting. After the emergence of the primary themes, to separate the components in the form of creating general categories, the interviews were continued in a semi-structured and structured manner to help in the formation of the theoretical saturation point. During the interview, the questions were continuously adjusted based on the conditions of the interview and the information of the interviewees so that the interview path does not deviate from the mainstream of the nature of the phenomenon under investigation. Some of the most frequently asked questions in the interview process were as follows:

• (1)

  What aspects of information disclosure in accounting procedures can be the basis for protecting the interests of human resources?

• (2)

  What aspects of information disclosure in accounting procedures can be the basis for protecting the shareholders’ interests?

• (3)

  How do shadow accounting functions help to protect forensic financial rights?

• (4)

  What do shadow accounting functions help to protect environmental rights?

• (5)

  What dimensions of cultural capital can be considered in sustainable intellectual capital reporting?

• (6)

  Does shadow accounting have an effective role in disclosing companies' intellectual property rights?

• (7)

  How effective is shadow accounting in complying with Business Rights Protection?

One of the most important parts of the grounded theory process is the completion of the interviews, and reaching the saturation point as a process and strategy in this analysis was very important. After each interview, the researchers started open coding and partially selective coding to determine their concepts and commonalities and based on this, in each step, the codes created from the selected coding step were compared. Therefore, by combining data collection methods in the form of unstructured and semi-structured interviews, it was tried to take theoretical notes during the interview and immediately after the interview. To obtain more reliable themes due to the mental preparation of the interviewers from the meeting, and avoid possible biases in coding. Therefore, by focusing on this process, the process of conducting interviews from the first interview to the 5th interview, approximately the dimensions of the theoretical framework were determined and from the sixth interview to the last interview, the researchers continued the interviews to make sure the saturation point was reached. Then, in the quantitative part, according to the presentation of the theoretical framework of the research, the dimensions of the sustainable intellectual capital reporting model based on the Fuzzy Delphi Method (FDM) are examined to measure the reliability of the study components in line with the identified categories to measure the components according to the two criteria of average and agreement coefficient. To conduct FDM, the main components obtained from the choice coding stage in the grounded theory process are designed in the form of a 5-option scoring checklist and distributed again among the study participants in the qualitative section to determine the identified dimensions. Do they cover the correctness of the concept under investigation or not? For this purpose, FDM was used in two stages. The main goal of the Delphi process is to reach the limit of theoretical adequacy based on the difference between the fuzzy mean of the first and second rounds so that the components that have the most agreement on them are approved. Criteria indicating the consensus of the percentage of items (the most common); The stability of answers and interpretation is based on the opinion of specialists, so that the components approved in the first round enter the second round and by repeating it, the level of consensus is created.

The rationale for using mixed methods in this study is one of two approaches that can be discussed and argued. In the first approach, as described in the literature review, driving motivation is the focus of the qualitative section based on the use of ground theory, the theoretical gap regarding the foundation of the concept of shadow accounting. Therefore, due to the emerging nature of this phenomenon and the lack of standard tools to measure it to test the research hypothesis, ground theory was used to create a researcher-made questionnaire. In the second approach, to justify the rationale of the mixed method of the study, it should be acknowledged that the purpose was to generalize the identified dimensions of shadow accounting to the realities of the capital market. For this reason, by creating a researcher-made questionnaire, an attempt was made to investigate the effect of social pressure anomie on shadow accounting according to the research hypothesis.

3.1 Measurement of variables

The questionnaire was divided into two parts, the first part collected data on social pressure anomie (SPA), and the second part on shadow accounting functions (SAF). Both questionnaires were administered to the same set of respondents, together. The questionnaires which were administered among the respondents were made on an ordinal scale. Participants were asked to rate the parameters in the range of 1–5 on their impact on the social pressure anomie (SPA) of the shadow accounting functions (SAF). (it is the least impact and 5 is the maximum impact).

Since the measuring instrument has been adopted to measure the anomie of stakeholders' pressure in previous studies (e.g. see Sharif Khafri et al., 2022; Khaki et al., 2021), this study also uses a standard questionnaire. Hence, the questionnaire was Likert-scaled from 1 to 5 and of the strongly agree/strongly disagree form. Five (5) copies of the questionnaire were given to each of the 100 companies sampled. Thus, a total of 399 copies of the questionnaire were administered. Cronbach alpha was used to test the reliability of the instrument. The results of the Cronbach alpha showed satisfactory internal reliability above 0.70 for each of the variables measured.

3.1.1 Social pressure anomie (SPA)

A questionnaire of 14 questions from Sharif Khafri et al. (2022) and Khaki et al. (2021) was used to measure this variable. The current study posed 14 study questions to the participants, which were grouped under 3 sub-heads. However, the 5-point “Likert rating scale was adopted for coding the response and mapping them into numeric values”. The noteworthy point is that the validity of the questionnaire was confirmed by experts in Iran and the reliability of this questionnaire was determined to be 0.92. The explanation of the subscales of this variable is presented in the following order:

• (1)

  Obedience Anomie: Obedience Anomie is trying to get logical requests based on rules and standards approved through the highest social institutions of a society in the form of changing rules and regulations.

• (2)

  Adaptability Anomie: It expresses a level of external pressure that gradually creates the possibility of creating social norms. In fact, in the absence of laws, the accepted values of the society act as a universal norm.

• (3)

  Symbolism Anomie: It expresses a level of attention to symbolic and respectable values, which causes the formation of self-desired behavior of shareholders in various fields of the capital market. For example, companies disclose the holding of numerous meetings with different NGOs in order to show a symbol of adherence to social values.

3.1.2 Shadow accounting functions (SAF)

In this study, due to the lack of a specific framework for the measurement of SAF, as explained in the qualitative section, a theoretical framework was presented through Glaser’s approach in grounded theory. According to the presented framework, the identified categories were considered as the main axes of the researcher-made questionnaire. To determine reliability through Cronbach’s coefficient, this questionnaire has reliability due to the acquisition of 0.89 coefficient. It is also worth mentioning that was confirmed the reliability of the axes identified in the fuzzy Delphi process. This questionnaire is also compiled in the form of a 5-point Likert scale.

Therefore, an adaptation model is used to provide a theoretical framework to test the research hypothesis in Figure 3.

4. Results

4.1 Qualitative design and data analysis (phase I)

In the first phase of this study, the construction of the qualitative research model is based on Glaser’s approach to grounded theory. To reach the dimensions of the shadow accounting framework, through three stages of coding and interviews with experts, a total of three categories; six components, and thirty-seven themes were identified, which are presented according to Table 3.

According to the identification of the coding processes according to Glaser’s approach in the grounded theory, in the following, each of the core components is discussed and argued in the form of conceptual themes about the concepts and sub-classifications created according to the interviews conducted and then, in the shadow of the conducted research, the necessary explanations are given regarding the emergence and development of the constituent components of each of the conceptual classifications.

4.1.1 Theoretical framework

Based on the coded themes, to reach the components and then the study categories, and according to the expression of the implementation issues in the codes identified in this section, it is necessary to present the theoretical framework. Therefore, according to the nature of Glaser’s (1992) analysis in the data theory of the foundation, the theoretical framework of the study is presented. As mentioned in the methodology, the analytical approach of Glaser (1992) differs from the analytical approach of Strauss and Corbin (1990) in an unstructured framework that is provided by the categories and components of the study. Therefore, relying on this concept, the theoretical framework of the study is presented in Figure 4:

According to the theoretical framework of the research, as it is known this model has separated in the form of 3 categories, 6 components, and 37 conceptual themes. In the following, to fit the reliability of the model, the Fuzzy Delphi Process is used to explain the target population of the research.

4.2 Quantitative design and data analysis (phase II)

In the second phase of data analysis, fuzzy Delphi and partial least squares processes.

4.2.1 Fuzzy Delphi method (FDM)

At this stage, after presenting the above theoretical framework, according to the basis of the components for evaluation, carried out of Fuzzy Delphi Method (FDM) according to Table 4 by compiling a 5-option checklist and sending it to the study experts.

According to the views presented in the first stage and comparing it with the results of this stage, if the difference between the two stages is less than the threshold of 0.2, then the survey process is stopped. As can be seen in Table 4, it was found that all the components identified in the qualitative stage are reception and a theoretical consensus has been reached.

4.2.2 Partial least squares (PLS)

To test the study hypothesis is used, a partial least squares (PLS) process. Therefore, first, descriptive statistics of the study variables are presented. To summarize the observed data, we established means and standard deviations. Based on guidelines by Field (2009), the means represent a summary of the data and the standard deviations indicate the extent to which the means represent the data. To evaluate the reliability of the study measurement model, factor load coefficients, Cronbach’s alpha coefficients, and combined reliability are presented in Table 5.

The criterion value for the suitability of factor load coefficients is 0.4. According to the data analysis algorithm in PLS, after measuring the factor loads of the questions, it is time to calculate and report Cronbach’s alpha coefficients and combined reliability, the results of which are shown in Table 6.

Considering that the appropriate value for Cronbach’s alpha and combined reliability is 0.7 and by the findings of the table above, these criteria have adopted a suitable value for latent variables, so the reliability of study measurement models can be confirmed. Divergent validity is the third criterion for examining the fit of measurement models. The acceptable divergence validity of a model indicates that one structure in the model has more interaction with its characteristics than other structures. According to Table 7, the root value of the mean of the common values of the hidden variables in the present study, which are located in the cells located in the main diameter of the matrix, is greater than the correlation value between those located in the lower and right cells of the main diameter.

According to the results of reliability, convergent validity, and divergent validity, it is observed that the measurement models of the structural equation model of the study have the ability to measure the hidden variables of the study optimally. Therefore, the fit of the structural model of the study is examined. After measuring the validity and reliability of the measurement model, the structural model was evaluated through the relationships between latent variables. In the present study, two criteria coefficient of determination (R2) and coefficient of predictive power (Q²) have been used. R2 is a measure that indicates the effect of an exogenous variable on an endogenous variable. According to Figure 5, the value of R2 has been calculated for the structures of the study, which can confirm the suitability of the structural model. In addition, a criterion called Q² was used to evaluate the predictive power of the pattern. According to the results of this criterion in Table 8, it can be concluded that the model has “strong” predictive power.

This criterion applies to the general part of structural equation models. That is to say, by this criterion, the researcher can also control the general fit of the research after examining the fitting of the measurement section and the structural part of the general model of his research. The GOF (Goodness of Fitness) criterion was developed by Tenenhaus et al. (2005) and is calculated according to the following Equation (1) and its results are presented in Table 9:

(1)GOF=Communalities¯×R2¯

Communalities¯ is the average of the common values of the latent variables of the study and R2¯ is the mean of the coefficient of determination of the endogenous variables of the model.

Given the value obtained for GOF of 0.53, excellent fit of the overall model is confirmed (see Table 10). After examining the fit of the measurement models and the structural model and having a suitable fit of the general model and according to Figures 5 and 6, the test results of the study hypotheses are examined and the results are presented in Table 11.

The coefficients of factor load coefficients and significant coefficients confirmed that all three criteria of SPA were correctly fitted in the structure of the model, and their sum showed that there is a negative and significant effect on SAF. According to the structural model and load factor, in the form of Table 11 shows the result of testing the study hypothesis:

According to Figures 4 and 5, the standardized coefficient (path coefficient), the dimensions of social pressure anomie have a positive and significant effect on shadow accounting functions, because the path coefficient is positive and equal to 0.63 and the t-statistic is equal to is 2.72, which because it is greater than 1.96, the result of the study hypothesis is supported. The results of the hypothesis test are consistent with Rudyanto and Siregar’s research (2018), Dewi et al. (2023) and Tian et al. (2015) are from this approach that emphasizes the importance of stakeholder pressure in disclosing transparent information in this study and the mentioned studies. This result shows that, following the irregularities caused by firms' disregard for social values and expected by stakeholders, external pressures on the corporate increase so that accounting procedures are disclosed in parallel with voluntary information. The disclosure of such information helps to create a unified norm due to the pressures of stakeholders, and in this way, firms can gain higher legitimacy.

5. Conclusion and implications

The objective of this paper was to establish the relationship between social pressure anomie with shadow accounting functions. This study was created in the qualitative part through Glaser’s approach in the grounded theory framework of shadow accounting functions. The results indicate the existence of 3 categories, 6 components, and 37 themes. Then, the partial least squares (PLS) process was used to test the research hypothesis. In the analysis of this result, it should be stated that when social values do not become a part of the responsible norms of firms in front of stakeholders, the external pressure is intensified to pay more attention to the qualitative aspects of information disclosure in financial reporting. These values can include aspects of human resource rights within firms to the external stakeholders’ rights; Institutional and business law. In other words, if there is no disclosure norm for these values, the stakeholders will demand an increase in the quality of information disclosure by putting pressure on the firms. In this case, shadow accounting as a parallel procedure with classical accounting can be considered as the normative basis of stakeholder pressure. Therefore, this result confirms that the anomie created by the pressure of stakeholders is the basis for strengthening the formation of shadow accounting. Shadow accounting is a part of social changes that make it possible to achieve the firms’ legitimacy in line with the shareholders' values and expectations. Therefore, voluntary information disclosure becomes more widespread to strengthen the stakeholders' trust so that while protecting their interests, other social rights such as the environment or institutional and forensic rights are also taken into account in accounting functions. Especially in the Iranian capital market, this result can be very important. The government’s intervention in the capital market to provide financial policies to reduce inflation caused the flow of liquidity into this market and after six months, a severe recession prevailed in the capital market. Many reasons can be mentioned for this happening, which can include a range of politics and institutional ownership to manipulation of financial statements. But the most important consequence of such an event in the capital market is the reduction of trust in the firm’s performance. Therefore, shadow accounting can be created under the stakeholders’ pressure and give meaning to the formation of the information disclosure homogeneity norm.

5.1 Implications

The results of this study can provide important implications for the development of concepts and practices of shadow accounting. The research findings also imply that the awareness of many parties of shadow accounting, both internal and external groups, will encourage business organizations to become more concerned with social and environmental aspects related to their business. Therefore, we need a global awareness of the concept of shadow accounting by all parties, including the public in general, to support responsible business practices that can contribute to social development. Moreover, the implication of this study can be for policymakers and standard-setters in the accounting profession to help the integrity and harmony of information disclosure by promoting ethical values and professional behavior. Also, the implication of this study is very important to create symmetry in the market to prevent the emergence of emotions of shareholders and investors (such as herding behavior).

5.2 Limitations and recommendations for future research

The limitations of the present study provide directions for future research as follows. Even though, the study selected a considerable number of respondents from the manufacturing industries of the Tehran Stock Exchange; future studies could survey the same sector (leather, textile, and agro-processing) and OTC Market firms (Over-the-counter) in Iran and other countries using self-administered questionnaire with large population data to test the practicability of the framework and execution procedure to improve the contents and structure of the framework. Besides, for practical case application, the study employed a mixed method study and collected quantitative data by questionnaire from manufacturing firms in the Tehran Stock Exchange, since shadow accounting is an emerging normative and behavioral process that requires its development in the literature of accounting knowledge. Thus, further qualitative and quantitative investigation (using empirical exploratory study) is required for investigation and verification of the practicability of the framework by employing both survey and company observation (document review) from several manufacturing firms in Iran; this enables to prove the impact of the proposed framework execution in improving manufacturing industries performance in Tehran Stock Exchange and Other markets in the world. Thus, further case studies using applied research can be carried out in selected manufacturing industries to execute the proposed framework implementation procedure to test its effectiveness in achieving competitiveness results. Finally, it should be acknowledged that future research with different designs can also measure stakeholder pressure, for example, by using qualitative or mixed methods through surveys or interviews with firms and their stakeholders. It might be beneficial to use different research designs, as the measures of stakeholder pressure used in this study may not capture the overall role of stakeholders in encouraging extensive shadow accounting functions.

Figures

Figure 1

Shadow accounting links

Figure 2

Step-by-step process of implementing methodology phases

Figure 3

Research hypothesis testing framework

Figure 4

Theoretical framework of shadow accounting functions

Figure 5

Structural model of hypothesis with factor load coefficients

Figure 6

Structural model of hypothesis with significant coefficients

Table 1

Prior research review

Name of researchers	Year of publication	Research title	Methodology	Main finding(s)	Research gap(s)	Major limitation(s)
Manetti et al.	2021	Unpacking dialogic accounting: a systematic literature review and research agenda	Method Nature: Case Study Method Tools: Systematic literature review	▪ Narrative development in information disclosure approaches ▪ Development of agonism in accounting	▪ Gap between rhetoric and sustainability practices	▪ The limitation of traditional, monologic reporting is a recurring topic
Bilal et al.	2023	A bibliometric review of corporate environmental disclosure literature	Method Nature: Case Study Method Tools: Bibliometric review	▪ Legitimization of environmental hazards via environmental disclosures ▪ The role of environmental accounting in achieving corporate environmental sustainability ▪ Integrating environmental social and governance (ESG) reporting into the global reporting initiatives (GRI) guidelines	▪ Absence of a unified norm for disclosure of environmental information	▪ Limitation of keywords in data mining evaluation
Andrew and Baker	2020	The radical potential of leaks in the shadow accounting project: The case of US oil interests in Nigeria	Method Nature: Case Study Method Tools: Content Screening	▪ The norm of sharing discourse accounting knowledge ▪ Voluntary Disclosure/Environmental Pollution	▪ Lack of theoretical literature ▪ Lack of institutional requirements in supervision ▪ Lack of information disclosure standards	▪ Lack of conceptualization of shadow accounting ▪ Lack of shadow accounting evaluation tools
Tregidga	2017	Speaking truth to power: Analyzing shadow reporting as a form of shadow accounting	Method Nature: Case Study Method Tools: Interview	▪ The effect of structural power on silencing the accounting voice ▪ Ignoring the role of shadow accounting in social movement	▪ Failure to generalize the criteria to the real study ▪ The abstractness of the dimensions of shadow accounting	▪ A potential limitation of this study is that it captures only two of the possible perspectives from the arena. This means that other voices in the issue arena are absent, including, for example, shadow report readers such as journalists, politicians, and members of civil society
McDonald-Kerr	2017	Water, water, everywhere Using silent accounting to examine accountability for a desalination project	Method Nature: Content analysis to identify relevant dimensions of shadow accounting Method Tools: Content Screening and Interview	▪ Identifying the styles of measuring environmental issues in this way of accounting	▪ Claims made by firms in voluntary disclosure do not have sufficient support in the real world ▪ Symbolic disclosure of environmental information	▪ The presented findings show more symbolic aspects of accounting responsibility than all the facts

Source(s): Author’s own creation/work

Table 2

Sample selection process

Panel A: industry distribution
Industry	Number of corporate	(%)
Automotive	25	13.51
Mining and metal products	19	10.27
Non-metallic minerals	12	6.48
Cement and plaster	34	18.37
Metals	18	9.72
Rubber and plastic	31	16.75
Machine tools	10	5.40
Oil, gas, and petrochemicals	8	4.32
Food	10	5.40
Pharmaceuticals and Healthcare	18	9.72
Total	185	100

Panel B: sample selection procedure
Explanation	Number of corporate
Total corporate	185
Less: firm-years with long periods without transactions	(24)
Less: firm-years with insufficient or missing data	(39)
Less: financial institutions	(22)
Final sample	100

Source(s): Author’s own creation/work

Table 3

Dimensions of shadow accounting functions framework

Main coding			Theoretical coding
Open code	Axial code	Selective code
Conceptual themes/Incidents	Core components	Categories	Core categories
Disclosure of human resource training costs	Effectiveness of Human Resources Rights Protection	Shadow Accounting Competitive Functions	Shadow Accounting Functions
Disclosure of human resource skills development budget
Disclosure of annual hours of human resources training
Disclosure of the presence of professional staff
Disclosure of competitive compensation to HR
Disclosure of gender appropriateness of human resources
Disclosure of human resource health insurance costs
Disclosure of internal control weaknesses	Effectiveness of Shareholders Rights Protection
Disclosure of managers' compensation
Disclosure of related party transactions
Disclosure of non-executive directors
Disclosure of free float stock
Disclosure of managerial ownership percentage
Disclosure of the company’s numerous financial legal cases	Effectiveness of Forensic Rights Protection	Shadow Accounting Structural Functions
Disclosure of legal risks of investment projects
Disclosure of financial and administrative violations
Disclosure of financial criminal cases settlement
Disclosure of judicial proceedings costs
Disclosure of legal examiner’s comments
Disclosure of investments in intellectual property	Effectiveness of Inventors/Funders Rights Protection
Disclosure of industrial patent ownership
Disclosure of agricultural patent ownership
Disclosure of industrial patent ownership
Disclosure of trademark registration
Disclosure of funders' share in the implementation of the invention
Disclosure of carbon and environmental pollution	Effectiveness of Environmental Rights Protection	Shadow Accounting Social Functions
Disclosure of investment in waste recycling
Disclosure of product life cycle assessment
Disclosure of investment in renewable energy
Disclosure of investment in production technologies
Disclosure of environmental development costs
Disclosure of customer-base concentration	Effectiveness of Business Rights Protection
Disclosure of market share
Disclosure of brand value
Disclosure of business privileges
Disclosure of advertising and marketing expenses
Disclosure of earned income per share

Source(s): Author’s own creation/work

Table 4

The fuzzy Delphi process of the second round

	Linguistic value	Very much	Much	Medium	Low	Very low						Result
	Numerical value	9	7	5	3	1	Max	Mod	Min	Un-fuzzy mean	Mean difference
Row	Sub-criteria - fuzzy value	(9,7,10)	(5,7,9)	(3,5,7)	(1,5,3)	(0,1,3)
1	Human Resources Rights Protection	55	5	0	0	0	9.32	8.26	7.10	8.06	0.12	Reception
2	Shareholders Rights Protection	58	2	0	0	0	9.9	8.80	7.51	8.41	0.18	Reception
3	Forensic Rights Protection	57	3	0	0	0	9.49	8.43	7.35	8.18	0.16	Reception
4	Inventors/Funders Rights Protection	53	7	0	0	0	8.65	8.04	6.88	7.49	0.10	Reception
5	Environment Rights Protection	59	1	0	0	0	9.93	8.90	7.80	8.89	0.18	Reception
6	Business Rights Protection	51	8	1	0	0	8.34	7.56	6.43	7.18	0.17	Reception

Source(s): Author’s own creation/work

Table 5

Confirmatory factor analysis

Variable	Factor	SFA→SFA	Symbol	Loadings
Shadow accounting functions (SAF)	Competitive Functions	0.886	CF1	0.919
			CF2	0.928
	Structural Functions	0.783	SF	0.949
			SF	0.957
	Social Functions	0.753	VF	0.961
			VF	0.944

Variable	Factor	SPA→SPA	Symbol	Loadings
Social pressure anomie (SPA)	Obedience Anomie	0.831	OA1	0.894
			OA2	0.904
			OA3	0.825
			OA4	0.933
	Adaptability Anomie	0.812	AA1	0.816
			AA2	0.900
			AA3	0.866
			AA4	0.828
			AA5	0.841
	Symbolism Anomie	0.775	SA1	0.828
			SA2	0.870
			SA3	0.728
			SA4	0.844
			SA5	0.784

Source(s): Author’s own creation/work

Table 6

Cronbach’s alpha and composite reliability results

Concealed variables	Symbol	Cronbach’s alpha (Alpha>0.7)	Composite reliability (CR > 0.7)
Competitive functions	CF	0.827	0.929
Structural functions	SF	0.899	0.952
Social functions	VF	0.899	0.952
Shadow accounting functions	SAF	0.734	0.850
Obedience anomie	OA	0.912	0.938
Adaptability anomie	AA	0.904	0.929
Symbolism anomie	SA	0.873	0.906
Social pressure anomie	SPA	0.731	0.848

Source(s): Author’s own creation/work

Table 7

Fornell and Larker matrices for divergent validity

Variables	Symbol	AA	CF	OA	SAF	VF	SPA	SF	SA
Adaptability anomie	AA	0.851
Competitive functions	CF	0.722	0.923
Obedience anomie	OA	0.513	0.540	0.890
Shadow accounting functions	SAF	0.747	0.892	0.694	0.809
Social functions	VF	0.549	0.555	0.452	0.758	0.953
Social pressure anomie	SPA	0.815	0.713	0.828	0.826	0.622	0.806
Structural functions	SF	0.536	0.581	0.679	0.783	0.330	0.660	0.953
Symbolism anomie	SA	0.461	0.476	0.485	0.569	0.522	0.788	0.383	0.812

Source(s): Author’s own creation/work

Table 8

Values of the coefficient of determination (R2) and the coefficient of predictive power (Q²)

Variables	Symbol	Q2	R2
Shadow accounting functions	SAF	0.718	0.393
Competitive functions	CF	0.796	0.666
Structural functions	SF	0.613	0.540
Social functions	VF	0.575	0.503
Obedience anomie	OA	0.686	0.527
Adaptability anomie	AA	0.664	0.460
Symbolism anomie	SA	0.621	0.373

Source(s): Author’s own creation/work

Table 9

Communalities and R²

Variables	Symbol	Communality	R2
Shadow accounting functions	SAF	0.224	0.718
Social pressure anomie	SPA	0.274	–
Competitive functions	CF	0.481	0.796
Structural functions	SF	0.591	0.613
Social functions	VF	0.593	0.575
Obedience anomie	OA	0.515	0.686
Adaptability anomie	AA	0.460	0.664
Symbolism anomie	SA	0.444	0.621

Source(s): Author’s own creation/work

Table 10

Results of the general model fit

GOF	R2¯	Communality¯
0.53	0.66	0.44

Source(s): Author’s own creation/work

Table 11

Results of the study hypothesis test

Effects	Path	Path Coeff.	T-value	Test result
Direct effect	Social Pressure Anomie SPA → Shadow Accounting Functions SFA	0.63	2.72	Supported
	Obedience Anomie OA → Shadow Accounting Functions SFA	0.69	2.18
	Adaptability Anomie AA → Shadow Accounting Functions SFA	0.78	2.40
	Symbolism Anomie AA → Shadow Accounting Functions SFA	0.38	2.95

Source(s): Author’s own creation/work

Notes

1. The focus of our paper is on CSR disclosure (i.e. the description of a company’s CSR activities and performance). This can be distinguished from CSR performance (i.e. the actual results of a company’s CSR activities). The degree to which these correspond is at the essence of disclosure quality.