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Article
Publication date: 2 August 2021

Jianmei Liu

As an important part of the disclosure of listed companies' annual reports, MD&A will disclose some "bad news" about the company. The purpose of this paper is to study whether…

Abstract

Purpose

As an important part of the disclosure of listed companies' annual reports, MD&A will disclose some "bad news" about the company. The purpose of this paper is to study whether such "bad news" can reduce information asymmetry and alleviate the risk of stock price crash remains to be seen.

Design/methodology/approach

Based on the sample of A-share listed companies from 2007 to 2016, the authors examine whether the negative information in MD&A could reduce stock price crash risk.

Findings

It is found that the negative information in MD&A does not reduce future crash, which indicates that the negative information in MD&A does not alleviate the information asymmetry. Further, it is also found this is due to the low readability of negative information which leads to the negative information not successfully released into the market timely. Only highly readable negative information can alleviate information asymmetry and suppress crash risk. In addition, the authors also find in the companies with more investor surveys negative tone is negatively correlated with crash risk, which means that investor surveys could help investors interpret the negative information in MD&A and alleviate stock price crash risk.

Practical implications

The practical significance of this article: this paper suggests that investors should carefully identify the quality of negative information in MD&A and pay attention to other quality characteristics besides credibility. This paper suggests that the regulator should pay attention not only to whether to disclose and the amount of disclosure but also to the quality of information disclosure, such as readability, so as to restrict management's strategic behavior in information disclosure.

Originality/value

First, different from previous studies on the impact of information disclosure on crash risk, this paper directly explores the impact of information in MD&A on stock price crash risk from the perspective of negative information disclosure that management most want to hide. It supplements the literature on the impact of information disclosure on stock price crash risk. Second, this paper studies the interaction between information tone and readability and its impact on the risk of stock price crash. Some studies believe that the credibility of negative news is higher and investors' reaction may be stronger. However, this paper finds that the disclosure of negative information may not be absorbed by the market because of the low readability. Third, this paper finds that investor surveys can help information users to interpret negative information and alleviate the risk of stock price crash, which shows that information disclosure of different channels will complement each other and improve information efficiency. Therefore, it advocates different information disclosure channels which has important practical significance for improving market pricing efficiency and reducing investment decision-making risk.

Details

Nankai Business Review International, vol. 12 no. 4
Type: Research Article
ISSN: 2040-8749

Keywords

Article
Publication date: 17 December 2020

Maher Jeriji and Waël Louhichi

The purpose of this paper is to investigate the relationship between hard, negative corporate social responsibility (CSR) information disclosure and corporate social performance.

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Abstract

Purpose

The purpose of this paper is to investigate the relationship between hard, negative corporate social responsibility (CSR) information disclosure and corporate social performance.

Design/methodology/approach

This study uses a generalised least squares panel data analysis based on a sample of firms ranked in the Fortune Global 500 for the period 2013–2016. Robustness check tests were conducted to limit endogeneity concerns.

Findings

The results show that in line with strategic legitimacy theory, agency theory and organisational stigma theory, poor sustainability performers disclose a low quality of hard, negative CSR information.

Practical implications

This paper provides guidance for stakeholders to identify good and poor CSR performers by better understanding whether corporate CSR reports are more likely to be symbolic or substantive when considering the amount of hard, negative content in their CSR stand-alone reports.

Social implications

The research highlights the opportunistic behaviour of CSR reporting, which is used more as a legitimation device than as an accountability mechanism. Thi

Originality/value

Although numerous studies have investigated the association between the level of corporate social disclosure (CSD) and corporate social performance, no research has focussed on hard, negative CSD. Also, an index that captures the disclosure quality rather than the quantity of negative CSR information was constructed.

Details

Sustainability Accounting, Management and Policy Journal, vol. 12 no. 2
Type: Research Article
ISSN: 2040-8021

Keywords

Article
Publication date: 6 February 2019

Hani Tadros and Michel Magnan

Focusing on a sample of firms from environmentally sensitive industries over several years, this study aims to reexamine the association between environmental disclosure and…

1612

Abstract

Purpose

Focusing on a sample of firms from environmentally sensitive industries over several years, this study aims to reexamine the association between environmental disclosure and environmental performance.

Design/methodology/approach

The authors use a panel data analysis to examine how the interaction between environmental performance and economic and legitimacy factors influence firms’ environmental disclosures.

Findings

Results suggest that environmental performance moderates the effect of economic and legitimacy incentives on firms’ propensity to provide proprietary environmental disclosure, with both sets of incentives being influential. More specifically, there appears to be a reporting bias based on the firm’s environmental performance whereas the high-performers disclose more environmental information in the three following vehicles: annual report, 10-K and sustainability reports combined. Results also show that economic and legitimacy factors influence the disclosure decisions of the low and high environmental performers differently.

Practical implications

Understanding the determinants of environmental disclosure for high and low environmental performers helps regulators to close the reporting gap between these firms.

Social implications

There is little evidence to suggest that firms with low-environmental performance attempt to use their disclosures to legitimize their environmental operations.

Originality/value

The study examines environmental disclosures of 78 firms over a period of 14 years in annual, 10-K and sustainability reports. The panel data analysis controls for significant cross-sectional and period effects.

Details

Sustainability Accounting, Management and Policy Journal, vol. 10 no. 1
Type: Research Article
ISSN: 2040-8021

Keywords

Article
Publication date: 20 January 2012

Pi‐Chuan Sun, Hsu‐Ping Chen and Kuang‐cheng Wang

The purpose of this paper is to explore the impacts of product harm, consumers' product knowledge and firms' negative information disclosure on ethical evaluation of a firm…

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Abstract

Purpose

The purpose of this paper is to explore the impacts of product harm, consumers' product knowledge and firms' negative information disclosure on ethical evaluation of a firm, especially, the moderating effects of product knowledge and negative information disclosure.

Design/methodology/approach

A 3×2×2 between‐subject design with three levels of product harm, two levels of product knowledge, and two treatments of negative information was used in this study. The experimental product is diet food.

Findings

The findings reveal that the level of product harm affects consumers' ethical evaluation. Furthermore, the individual's ethical evaluation will influence his or her purchase intention. The main effect of subjective knowledge is significant while its moderating effect is not significant. It is also found that the negative information disclosure will lower consumer's ethical evaluation of a firm, and the effect of product harm on ethical evaluation will be stronger for harmful products than for harmless products when the negative information is disclosed.

Practical implications

Marketers might need to be especially responsive if their practices result in a diminished reputation for their firms and lost sales. Exploiting the vulnerability of consumers or worsening their situation by marketing harmful products might be evaluated as unethical under principles of justice. It is suggested that marketers include increased disclosures of actual product harm levels relative to industry norms.

Originality/value

Consumers' product knowledge and firms' negative information disclosure are integrated into the model, exploring the effect of product harm on consumer's ethical evaluation of a firm and their moderating effects are discussed.

Article
Publication date: 18 January 2013

Ipek Aktar

The author's objective is to reveal the consumer responses to information disclosure strategies regarding controversial ethical issues.

2098

Abstract

Purpose

The author's objective is to reveal the consumer responses to information disclosure strategies regarding controversial ethical issues.

Design/methodology/approach

The author is interested in how voluntary disclosure of questionable business practices by chocolate manufacturers regarding child labor exploitation at cocoa plantations influences consumer behavior. A total of 120 students participated in an experimental study in which the author manipulated awareness of ethical issues in the chocolate industry and corporate disclosure strategy. The author measured willingness to pay (WTP) and consumer perceptions about the firm's commitment to corporate social responsibility.

Findings

The study found that voluntary disclosure of unethical business practices by a firm was not damaging in terms of consumer perceptions. When public awareness was limited, disclosing participation in unethical behavior did not influence WTP for the firm's products. When public awareness was high, disclosing this negative information is even more beneficial than no disclosure and generates similar responses to including only positive elements in the firm's communication, provided that the firm commits to eliminate its unethical practices.

Research limitations/implications

Voluntary negative social disclosure will not hurt a firm's performance in terms of sales, given the disclosure is transparent and this suggests a credible commitment to improve its practices regarding the issue.

Originality/value

The author investigates the optimal strategy for a firm to disclose ethical infractions. She demonstrates that being open about them does not necessarily damage a firm's reputation and suggests under which conditions this is the case.

Article
Publication date: 5 October 2018

Bradley Rudkin, Danson Kimani, Subhan Ullah, Rizwan Ahmed and Syed Umar Farooq

This paper investigates the legitimacy tactics used in the annual reports of UK listed companies in the aftermath of major corporate scandals.

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Abstract

Purpose

This paper investigates the legitimacy tactics used in the annual reports of UK listed companies in the aftermath of major corporate scandals.

Design/methodology/approach

We carried out a content analysis of annual reports of 19 companies that have been involved in corporate scandals with a view to understand how firms communicate negative scandals affecting them.

Findings

The findings reveal that firms use a wide range of legitimisation strategies in the manner that contribute to shape disclosure communications concerning negative incidents. For instance, some firms may offset the negativity linked to an incident by rendering such explanations amidst positive information.

Originality/value

Contrary to earlier studies conducted on accounting scandals, the authors incorporated extensive corporate scandals such as human rights violations, controversies concerning child labour, environmental scandals, corruption, financial embezzlement and tax evasion.

Details

Corporate Governance: The International Journal of Business in Society, vol. 19 no. 1
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 30 June 2020

Yue Pan, Qiuping Chen and Pengdong Zhang

The purpose of this study is to investigate whether and how policy uncertainty affect corporate environmental information disclosure.

Abstract

Purpose

The purpose of this study is to investigate whether and how policy uncertainty affect corporate environmental information disclosure.

Design/methodology/approach

This study conducts a difference-in-difference estimation and systematically investigates the relationship between policy uncertainty and corporate environmental information disclosure. The baseline regression results are robust to a series of robustness and endogeneity tests.

Findings

The authors show that firms located in cities with stronger policy uncertainty disclose less information on environmental issues. Furthermore, this negative relationship is stronger in the Midwest and in pre-industrial regions and for stated-owned firms and firms in highly polluting industries.

Practical implications

This study argues that policy uncertainty reduce the corporate disclosure of environmental information. Therefore, the results provide evidence on how to better emphasize the importance of green gross domestic product in the performance appraisal system for officials.

Social implications

This study confirms that corporate environmental disclosure is a response to public pressure. The results encourage the government and the public to increase corporate awareness of environmental protection.

Originality/value

This study contributes to the literature in the following ways. First, the authors provide a new perspective to study the relationship between policy uncertainty and corporate finance. Second, it contributes to the literature on corporate environmental information disclosure by linking policy uncertainty with firms’ disclosure of environmental information. Third, this study is a serious attempt to solve the problem of endogeneity between policy uncertainty and corporate environmental information disclosure.

Details

Sustainability Accounting, Management and Policy Journal, vol. 11 no. 5
Type: Research Article
ISSN: 2040-8021

Keywords

Article
Publication date: 30 October 2018

Sabrina M. Hegner, Ardion D. Beldad and Ruth Hulzink

Brands facing a crisis have to decide whether to disclose crisis-related information themselves or to wait and take the risk that a third party breaks the news. While brands might…

1095

Abstract

Purpose

Brands facing a crisis have to decide whether to disclose crisis-related information themselves or to wait and take the risk that a third party breaks the news. While brands might benefit from self-disclosing the information, it is likely that the impact of crisis communication on customers’ evaluation of the brand depends on the type of crisis. This study aims to investigate the influence of type of crisis on the relationshp between disclosure and brand outcomes.

Design/methodology/approach

A 2 × 2 between-subjects experiment with 180 Dutch participants was conducted.

Findings

Results show that self-disclosure of a negative incident positively affects consumers’ attitude, trust and purchase intention compared to third-party disclosure. Additionally, disclosure and crisis type interact. In times of a product-harm crisis, self-disclosure does not represent an advantage to third party disclosure, while in times of a moral-harm crisis disclosure by the brand is able to maintain customers’ positive attitude towards and trust in the brand compared to disclosure by a third party. Moreover, blame attribution mediates the effect of crisis type on brand evaluations.

Originality/value

Recent research indicates that self-disclosing crisis information instead of waiting until thunder strikes has beneficial effects for a brand in times of crisis. However, these studies use the context of product-harm crises, which neglects the possible impact of moral-harm crises. Furthermore, this study adds the impact of blame attributions as a mediator in this context.

Details

Journal of Product & Brand Management, vol. 27 no. 5
Type: Research Article
ISSN: 1061-0421

Keywords

Article
Publication date: 21 August 2020

Hani Tadros, Michel Magnan and Emilio Boulianne

This study aims to examine the disclosure determinants of environmental performance indicators (EPIs) for a sample of US firms to understand if these disclosures are reliable or…

Abstract

Purpose

This study aims to examine the disclosure determinants of environmental performance indicators (EPIs) for a sample of US firms to understand if these disclosures are reliable or whether they are biased towards the reporting of positive information.

Design/methodology/approach

The study uses a panel data analysis to examine the association between firms’ EPIs disclosures and their environmental performances, and other economic and legitimacy factors.

Findings

The results show that firms’ disclosures are not associated with the level of environmental performance and that firms continue to provide EPI information even if they witness a decline in their environmental performance. The evidence suggests that firms’ environmental disclosures are reliable and indicative of their environmental performance.

Practical implications

The findings suggest that mandating EPI disclosures may increase the level of the information reported and reduce firms’ discretion over the disclosure of such information.

Originality/value

Reporting of EPIs is directly linked to firms’ environmental performances. By examining the association between EPI disclosures and environmental performance, the study contributes to the ongoing debate about firms’ reporting and whether it is informative to its stakeholders or whether firms use this type of information to legitimize their operations and portray it in a positive light.

Details

Journal of Financial Reporting and Accounting, vol. 18 no. 4
Type: Research Article
ISSN: 1985-2517

Keywords

Article
Publication date: 2 January 2024

Fushu Luan, Wenhua Qi, Wentao Zhang and Victor Chang

The connection between digital manufacturing technologies (Industry 4.0) and the environment has sparked discussions on firms' disclosure of negative information on pollutant…

Abstract

Purpose

The connection between digital manufacturing technologies (Industry 4.0) and the environment has sparked discussions on firms' disclosure of negative information on pollutant emissions and the pursuit of positive environmental outcomes. However, very few studies explore how it relates to a firm's robot usage and its mechanism. The purpose of this paper is to investigate the impacts of robot penetration on firms' environmental governance in China.

Design/methodology/approach

The ordered probit model (and probit model) are employed and empirically tested with a sample of 1,579 Chinese listed firms from 2010 to 2019.

Findings

The study reveals a negative relationship between robot usage and the disclosure of negative indicators and a U-shaped relationship between robot usage and positive environmental outcomes. Among the sample, nonstate-owned enterprises (SOEs) display unsatisfactory performance, while heavily polluting industries disclose more information on pollutant emissions. The robot–environmental governance nexus is conditional on firm size, capital intensity and local economic development.

Originality/value

The study proposes a fresh view of corporate environmental governance to assess the environmental implications of robot adoption. It also contributes to identifying the curvilinear, moderating and heterogenous effects in the robot–environment nexus. The results provide rich policy implications for the development of industrial intelligence and corporate environmental governance in the circular economy (CE) context.

Details

Information Technology & People, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0959-3845

Keywords

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