Stakeholder theory calls for decision makers to balance stakeholder interests, but before this can happen, management must understand how other parties view its decisions. Effective stakeholder dialogues convened to reach this understanding require management to appreciate how others perceive the risks posed by their decision. Although understanding others' risk perception is crucial for effective communications, we do not have a clear idea of how viewing a situation from multiple stakeholder perspectives affects risk perception. Based on a technique derived from risk perception studies of health and environmental issues, an experiment with 224 business students examined how an individual's risk perception can account for both managerial and customer perspectives. Factors described as customer participation, extent of the effect, and management input, together with the respondent's self-assessed understanding of the decision process, help categorize overall risk perceptions and are shown to be associated with behaviors based on the decision's riskiness. Discussion includes implications for designs of business communications, including their content and transparency, and for understanding the audience for these communications.

We investigate the relationship between institutional shareholdings and the firm's corporate governance by looking at changes in the composition of the board of directors and audit committee while institutional ownership increases over time. Our comparison of 74 firms showing increased institutional ownership with a matched control group of 62 firms finds that increased institutional ownership is positively associated with a higher proportion of outsiders on the board and with audit committee and board members who are less entrenched. These factors are widely regarded as signs of a strengthened system of corporate governance and control, underscoring the important role that institutional ownership may play in the firm's corporate governance structure.

Purpose -To inform research on source credibility by providing insight into investors' perception and use of common information sources. Design/methodology/approach -In total, 235 individuals with investing experience or intent ranked the perceived credibility of nine common sources that report unaudited corporate earnings estimates and nine sources of non-financial performance measures. Respondents also assessed the relative value of source credibility to their investment decisions and indicated which common sources of information they use when investing. Findings -Results indicate no significant differences in the rankings between more and less experienced investors. Respondents seemed to impute accountability or independence to certain sources without warrant. Source credibility was less valued in the non-financial performance measurement context than in the earnings estimate setting. A surprisingly low proportion of investors reported using the auditor's report and financial statement notes in combination with financial statement data. Research implications/limitations -Theory can usefully be expanded to address investors' assumptions about source accountability or independence and the data context's effect on the relative value of source credibility. Using US-based participants potentially limits the ability to generalise results. More extensive lists of sources may refine the observed differences. Practical implications -Results suggest that investors should question their assumptions about a source's typical behaviour. Similarly, financial reporting professionals may need to promote more heavily the value of credible sources of non-financial performance measures while reminding investors of the importance of common financial reporting vehicles. Originality/value -In addition to providing investor feedback on source credibility, this paper reveals areas for theory to address and raises questions for further performance measurement research.

No abstract

No abstract