Social Reporting and New Governance Regulation: The Prospects of Achieving Corporate Accountability Through Transparency

Abstract

This paper argues that social reporting can be an important form of New Governance regulation to achieve stakeholder accountability. Current social reporting practices, however, fall short of achieving stakeholder accountability and actually may work against it. By examining the success and failures of other transparency programs in the United States, we can identify key factors for ensuring the success of social reporting over the long term. These factors include increasing the benefits-to-costs ratios of both the users of the information and the disclosers, and recognizing the importance of the involvement of third-party intermediaries.

And yet they thrive!—Regaining the relevance of a transparency system

“…Why? Hess () argues that, once implemented, a transparency system must evolve over time to increase, or even keep, its relevance. This is in line with the findings of Fung et al.…”

“…Why? Hess (2007) argues that, once implemented, a transparency system must evolve over time to increase, or even keep, its relevance. This is in line with the findings of Fung et al (2004), demonstrating that continuous improvement in several dimensions, such as use, accuracy and scope, is necessary for sustainability.…”

A Survey of Transparency: An Intrinsic Aspect of Business Strategy

“…Corporate transparency is the ‘availability of company specific information to those who are outside listed companies’ (Bushman et al ., ; Bhat et al ., ; Pattnaik et al ., ). Hess () introduces the term organizational transparency as the right to know , considering that, together with commitment to stakeholders, it is considered an objective of social information when interpreted as a mechanism of government. DeBoskey and Gillett () consider that corporate transparency is composed by multiple dimensions.…”

Why the Extractive Industry Should Support Mandatory Transparency: A Shared Value Approach

“…These results of the EITI reflect the results of earlier studies regarding social reporting more broadly. Hess () outlines the failures and pitfalls of voluntary social reporting initiatives and also argues for mandatory social reporting as necessary. Such voluntary systems are hampered in attaining their goal of organizational transparency, strengthened transparency, and/or stakeholder engagement because they leave corporation too much room to manoeuver to co‐opt the process and turn it into a tool of stakeholder management.…”

“…As criticisms on the value of information comprised through the EITI seem to reflect, voluntary—and in this case importantly discretionary—approaches can serve as a legitimizing and insurance tool, without improvements of social performance. Hess () builds on the work of Fung et al () who argue that for transparency policies to be effective (generate a functioning “action cycle”, the information produced through these policies should become embedded in everyday decision making of both the disclosers and users of the information as to become reciprocally reinforcing. By generating a fixed and detailed template for reporting, excluding exceptions, applicable to all covered companies, conditions for such ongoing use on both sides of the spectrum are created by the amendment.…”