Stakeholder engagement practices and impression management

Purpose The purpose of this paper is to assess the substantiveness of stakeholder engagement by examining voluntary disclosures tied to the engagement process. The objective is to draw a portrait of stakeholder engagement practices and determine whether they genuinely contribute to informing stakeholders or whether they are simply intended to manage stakeholders’ impressions. Design/methodology/approach The authors performed an exploratory content analysis on 113 sustainability reports published in 2018 in the Global Reporting Initiative database. The authors investigated disclosures tied to consulted stakeholders, communication modes and material issues resulting from the engagement process. The authors then assessed the substantiveness of these disclosures to determine the extent of the impression management tactics deployed in the stakeholder engagement disclosures made by Canadian companies. Findings Data analysis showed that more than a third of Canadian firms tend to make generic disclosures on their stakeholders’ engagement. As well, almost half the engagement modes disclosed are unidirectional and fewer than 33% of Canadian companies disclose on relevant sustainability issues. Furthermore, only 26% of the sample seek assurance on the information disclosed. Overall, the authors note an important trend in impression management used in sustainability reporting and underscore a potentially significant sectoral effect in the tactics used. Originality/value These data provide new insight into stakeholder engagement processes and highlight the strategies used by Canadian companies to manage their stakeholders’ impressions rather than their expectations. The study also contributes to a better understanding of the underexplored stakeholder engagement process and provides regulatory organisations with deepened insights to better frame stakeholder engagement disclosures.

Peranan Karakteristik Dewan Direksi dan Struktur Kepemilikan dalam Pengungkapan Sukarela Perusahaan Publik Indonesia

The objective of this study is to demonstrate that characteristics of the board of directors and ownership structure influence the level of voluntary disclosure. Board of directors’ characteristics include the board's size, composition, frequency of meetings, gender, expertise, and compensation. These attributes reflect the ownership structure, which includes foreign ownership, institutional ownership, and director ownership. Control variables include company size, firm age, leverage, profitability, and liquidity. This study utilized secondary data from 52 consumer goods companies listed on the Indonesia Stock Exchange for the period 2016 to 2020. In total, 228 observations were tested for hypotheses, after 32 outliers were removed from the data. The hypotheses were tested using panel regression with a Fixed Effect Model (FEM). The study found that all independent variables simultaneously have a significant impact on voluntary disclosures. According to the partial test (t-test), only the remuneration of directors and institutional ownership had a significant and positive effect on voluntary disclosures, while other variables had no significant impact. In addition, the foreign ownership variable had a significant affect on voluntary disclosure, however the direction is negative.

Does corporate governance compliance condition information asymmetries? Moderating role of voluntary disclosures

PurposeThis study examines the moderating effects of low and high levels of voluntary disclosures (VDs) between corporate governance and information asymmetry (IA).Design/methodology/approachThe study used PROCESS macro to construct bootstrap confidence intervals at the 95% level to estimate the model, and “simple slope analysis” to visualize the model.FindingsThe better corporate governance provides a monitoring mechanism that disseminates private information and reduces IA The effect of corporate governance on IA is contingent on the levels of VDs within a firm, and this relationship is strengthened when the level of VDs within a firm is high, and results remain consistent when levels of sub-indices are high. Additional analysis reveals that effective boards and audit committees reduce IA. Increased inside, an associated company, family and foreign ownership exacerbate IA, whereas institutional owners act as effective monitors to overcome informational disadvantages.Practical implicationsThe findings provide implications for policymakers to promote corporate governance and more relevant reporting practices as effective mechanisms for protecting shareholders' rights and attenuating IA in capital markets.Originality/valueThe study is valuable to understand the strength of the relationship between corporate governance and information asymmetries based on the moderating role of different VD levels.

Voluntary disclosure of a company performance and the market reaction

In today's world, the disclosure of information by a firm affects its position in the financial markets. Enterprises contact investors utilizing reporting about certain events. For this purpose, both official financial reports and less regulated communication channels, such as the company's website on the Internet, personal meetings, or social networks, can be used. The relevance of this research result is primarily due to the increased attention of investors to voluntary disclosures rather than mandatory ones. By studying a sample of companies in the automotive industry from the United States and Europe, we found out that making positive and negative voluntary disclosures on the annual return on shares of these companies. The paper reports that this effect is significant: while it increases the shares' annual yield with positive disclosures and decreases with negative ones.

When you talk, I remain silent: Spillover effects of peers' mandatory disclosures on firms' voluntary disclosures

We predict and find that regulated firms' mandatory disclosures crowd out unregulated firms' voluntary disclosures. Consistent with information spillovers from regulated to unregulated firms, we document that unregulated firms reduce their own disclosures in the presence of regulated firms' disclosures. We further find that unregulated firms reduce their disclosures more the greater the strength of the regulatory information spillovers. Our findings suggest that a substitutive relationship between regulated and unregulated firms' disclosures attenuates the effect of disclosure regulation on the market-wide information environment.

The Trade-Off Between Mandatory and Voluntary Disclosure: Evidence From Oil Companies’ Risk Reporting

Theoretical propositions suggest that mandatory and voluntary disclosures are related. Empirical studies focusing on this relationship provide mixed evidence as they found that mandatory and voluntary disclosures are either complements or substitutes. Relying on a proprietary, hand-collected database about the risk disclosure of oil companies, we find that voluntary risk disclosure increases with the level of mandatory risk disclosure up to a threshold above which companies reduce their voluntary disclosures. We also find that this relationship depends on the firm-level uncertainty, and it is sharpened in the presence of high exposure to liquidity risk. Overall, our results contribute to the debate on whether and on which level disclosure should be regulated. JEL Classification: M41, G14