Governance implications of the effects of stakeholder management on financial reporting

Abstract

PurposeThe purpose of this paper is to test whether effective stakeholder management results in transparent financial reporting.Design/methodology/approachThis paper uses a linear model informed by stakeholder theorizing and established measures of stakeholder management, earnings quality, and earnings management.FindingsOrganizations exhibiting effective stakeholder management have higher earnings quality and are less likely to engage in discretionary earnings management.Research implicationsFuture research should carefully sort out the meaning of different measures of earnings quality, should clarify cross‐national institutional differences to reconcile contradictions in extant research, and should discover the underlying governance orientations that shape decision‐making processes and outcomes.Practical implicationsGoverning bodies must take into account how underlying organization cultures shape governance regimes, which may determine the transparency with which organization actors interact with various stakeholder groups.Originality/valueThis study establishes a positive link between effective stakeholder management and transparent financial reporting, suggesting that both may be artifacts of deeper underlying orientations toward accountability, transparency, and managerial discretion.

Kontribusi Karakteristik Perusahaan Dan Corporate Governance Terhadap Publikasi Sustainability Report

“…Namun demikian, hasil penelitian Idah (2013) di atas berbeda dengan temuan Kurnianingsih (2013) Merujuk pada teori stakeholder, perusahaan ingin memenuhi harapan para stakeholder dengan membuat Sustainability Report yang mendeskripsikan mengenai aktivitas perusahaan dibidang sosial dan masyarakat sekitar (Kumar, 2014). Di sam-ping itu, komite audit sebagai salah satu perwujudan Good Corporate Governance secara empiris dapat meningkatkan corporate environment disclosure (Mattingly, et al, 2009;Sun, et al, 2010).…”

Corporate Social Performance: A Review of Empirical Research Examining the Corporation–Society Relationship Using Kinder, Lydenberg, Domini Social Ratings Data

“…Siegel and Vitaliano (2007) distinguished between strategic and public CSP, theorizing more reliable economic returns from strategic forms than from public forms of CSP. Also, Mattingly, Harrast, and Olsen (2009) examined effects on accounting practices, especially earnings transparency, on technical benefit, technical harm, institutional benefit, and institutional harm, following measurement protocols established by Mattingly and Berman (2006). These measures combined the distinction between positive and negative aspects of CSP with the distinction between institutional and technical stakeholders.…”

“…Among the findings were that a company’s tendency toward beneficial social action was positively associated with earnings quality, or transparent reporting, and negatively associated with earnings management, or manipulated reporting. Social harm was negatively related to earnings quality, but not to earnings manipulation (Mattingly et al, 2009). Another study found that environmental concern was positively related to overstatement of earnings, whereas environmental strength and neutrality were unrelated to earnings management (Heltzer, 2011).…”

Fair Value Accounting and Implications for the Auditing Profession: Historical Overview

“…As a result, using FVA to prepare firms' assets and liabilities estimates needs a third party to ensure the reliability and credibility of the fair values prepared by managers (Griffith et al, 2015;Lachmann et al, 2015). Auditors, in this case, should act as a monitoring tool to assist shareholders in making decisions by minimising the problem of asymmetric information caused by the agency conflict (Mattingly et al, 2009;Sangchan et al, 2020). The ongoing debate regarding the major role of FVA on the crisis had implications for accounting practices particularly the auditing profession.…”