Voluntary Disclosure of Corporate Strategy: Determinants and Outcomes - An Empirical Study into the Risks and Payoffs of Communicating Corporate Strategy

Abstract

VOLUNTARY DISCLOSURE OF CORPORATE STRATEGY: DETERMINANTS AND OUTCOMESKeywords: Voluntary disclosure, corporate strategy.Business leaders increasingly face pressure from stakeholders to be transparent. There appears however little consensus on the risks and payoffs of disclosing vital information such as corporate strategy. To fill this gap, this study analyzes firm-specific determinants and organisational outcomes of voluntary disclosure of corporate strategy. Stakeholder theory and agency theory help to understand whether companies serve their interest to engage with stakeholders and overcome information asymmetries. I connect these theories and propose a comprehensive approach to measure voluntary disclosure of corporate strategy. Hypotheses from the theoretical framework are empirically tested through panel regression of data on identified determinants and outcomes and of disclosed strategy through annual reports, corporate social responsibility reports, corporate websites and corporate press releases by the 70 largest publicly listed companies in the Netherlands from 2003 These questions triggered the writing of this dissertation, being a professional consultant and public relations executive, trying to understand the dynamics of communicating corporate strategy. Or as the topic is formulated in management research terminology:exploring determinants and organisational outcomes of voluntary disclosure of corporate strategy. 8 Research objective and methodologyBased on the identified gap in business practice and academic research, this section formulates the research objective, research questions and methodology of my research. A justification on the methodology is provided, followed by the pursued usefulness of this research for research and business practice. Research objective and research questionsTo fill the gap in business practice and in academic research on voluntary disclosure of corporate strategy, the research objective of this thesis is formulated as follows: To develop understanding and provide empirical evidence that help leaders of publicly listed companies understand how voluntary disclosure of corporate strategy contributes to corporate success.This research objective drives the following research questions:1. What are determinants of voluntary disclosure of corporate strategy?2. What are outcomes of voluntary disclosure of corporate strategy? MethodologyAs no earlier comprehensive research is known on voluntary disclosure of corporate strategy, literature research is conducted to construct a (preliminary) theoretical framework to identify and formulate the determinants and outcomes of voluntary disclosure of corporate strategy. The hypotheses that are based on these determinants and 9 outcomes are tested in a large-scale quantitative study, based on secondary data, available in the public field. The data are longitudinal, spanning a period of six years.The research questions are answered using the following process:• A theoretical framework is constructed to explain volu...

Determinants of strategy disclosure quality: empirical evidence from Germany

“…Since the 1960s, a considerable body of research investigates the impact of corporate characteristics on voluntary disclosure level in financial reporting (see Ahmed & Courtis, 1999;Cooke, 1989;Singhvi & Desai, 1971 Ferreira and Rezende (2007) analyzed analytically the information disclosure about corporate strategy and pointed out that it provides strong incentives for partners of the firm to undertake strategy-specific investments. Especially the studies of Coebergh (2011) and Sieber (2011) are focusing on the determinants of voluntary strategy disclosure. The results of Coebergh (2011) showed that listing age, industry, dual-listing status, profitability and national ranking status have significant effects on voluntary disclosure of corporate strategy.…”

“…Especially the studies of Coebergh (2011) and Sieber (2011) are focusing on the determinants of voluntary strategy disclosure. The results of Coebergh (2011) showed that listing age, industry, dual-listing status, profitability and national ranking status have significant effects on voluntary disclosure of corporate strategy. Sieber (2011) showed that there is a significant relation between the independent variables company size, industry, leverage, indices classification, shared capital concentration and the dependent variable strategy disclosure.…”

“…Numerous studies found a significantly positive influence of firm size on disclosure (Abraham & Tonks, 2006;Bushman, Piotroski, & Smith, 2004;Camfferman & Cooke, 2002;Chow & Wong-Boren, 1987;Coebergh, 2011;Cooke, 1989;Lang & Lundholm, 1993;Prencipe, 2004;Sieber, 2011;Singhvi & Desai, 1971). The majority of the studies found that more reporting is done by large companies compared to small companies -but different proxies were used (Ahmed & Courtis, 1999).…”

Theoretical Linkage between Corporate Social Responsibility and Corporate Reputation

“…For instance, many scholars suggested that the essential ingredient to building the relationship with stakeholder is mainly through communication. Coebergh (2011) argued that corporation has the responsibility to engage with stakeholders because they hold power to affect the achievement and outcome of the corporation. van Riel (2000) observed that corporation could create understanding, awareness and appreciation for its strategic goal via communication, ideally resulted in satisfaction of interest for both corporations as well as the environment which transforms into CR.…”

To what extent companies listed on alternative investment markets disclose strategic information in their annual reports? – comparative case studies

“…Moreover, the subject discussed in this paper refers to research which has been already carried out within Europe [Santema et al 2005] − in particular in Denmark [Santema, van de Rijt 2001], Holland [Coebergh 2011], Germany [Sieber et al 2014] as well as in South Africa [Ungerer 2013] and Brazil [Pagliarussi et al 2010]. …”