Earnings Management and Investor Protection: An International Comparison

What makes organizations so similar? We contend that the engine of rationalization and bureaucratization has moved from the competitive marketplace to the state and the professions. Once a set of organizations emerges as a field, a paradox arises: rational actors make their organizations increasingly similar as they try to change them. We describe three isomorphic processes-coercive, mimetic, and normative—leading to this outcome. We then specify hypotheses about the impact of resource centralization and dependency, goal ambiguity and technical uncertainty, and professionalization and structuration on isomorphic change. Finally, we suggest implications for theories of organizations and social change.

The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields (Chinese Translation)

Previous empirical evidence provided mixed results on the relationship between corporate environmental performance and environmental disclosures. We revisit this relation by testing economics based theories of voluntary disclosure using a more rigorous research design. In particular, we improve on the prior literature by focusing on purely voluntary environmental disclosures and by developing two reliable environmental performance measures using actual toxic emissions and waste management data. We also develop a content analysis index based on the Global Reporting Initiative sustainability reporting guidelines to assess the extent of discretionary disclosures in environmental and social responsibility reports. This index better captures firm disclosures related to its commitment to protect the environment than the indices employed by prior studies. Using a sample of 191 firms from the five most polluting industries in the U.S., we find a positive association between environmental performance and the extent of discretionary environmental disclosures. The result is consistent with the predictions of the economics based voluntary disclosure theory.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID899974_code.pdf?abstractid=899974&rulid=5134755&mirid=2

Revisiting the Relation Between Environmental Performance and Environmental Disclosure: An Empirical Analysis

Previous empirical evidence provides mixed results on the relationship between corporate environmental performance and the level of environmental disclosures. We revisit this relation by testing competing predictions from economics based and socio-political theories of voluntary disclosure using a more rigorous research design. In particular, we improve on the prior literature by focusing on purely discretionary environmental disclosures and by developing a content analysis index based on the Global Reporting Initiative sustainability reporting guidelines to assess the extent of discretionary disclosures in environmental and social responsibility reports. This index better captures firm disclosures related to its commitment to protect the environment than the indices employed by prior studies. Using a sample of 191 firms from the five most polluting industries in the US, we find a positive association between environmental performance and the level of discretionary environmental disclosures. The result is consistent with the predictions of the economics disclosure theory but inconsistent with the negative association predicted by socio-political theories. Nevertheless, we show that socio-political theories explain patterns in the data (“legitimization”) that cannot be explained by economics disclosure theories. 2007 Elsevier Ltd. All rights reserved.

/pdf/revisiting-the-relation-between-environmental-performance-1b1y6f6b4x.pdf

Revisiting the relation between environmental performance and environmental disclosure: An empirical analysis

An Organizational Theoretic Review of Green Supply Chain Management Literature

Using a direct measure of environmental legitimacy, we explore the impact of annual report environmental disclosures and environmental press releases as legitimation tools. The sample comprises North American firms (Canada and the United States). The results obtained show that environmental legitimacy is significantly and positively affected by the quality of the economic-based segments of annual report environmental disclosures and by reactive environmental press releases, but not by proactive press releases. Moreover, our results suggest that negative media legitimacy is a driver of environmental press releases but not of annual report environmental disclosures.

Media legitimacy and corporate environmental communication

https://isiarticles.com/bundles/Article/pre/pdf/14497.pdf

Corporate environmental disclosure, financial markets and the media: An international perspective

Intra-industry imitation in corporate environmental reporting: An international perspective

Self-serving attributional tendencies in annual report narratives are generally construed as purposive impression management behaviour. Attributional biases in accounting narratives could, however, be primarily the result of a cognitive informational process rather than of an external impression management process. Existing research results are equivocal on this point. In this paper we treat a capital market context as a pivotal variable to discern situations of strong and weak motivational influences and contrast the self-serving reasoning tendencies in listed and unlisted companies. A second purpose of the paper is to explore the impact of content characteristics of the explained effect in attributional statements on the self-serving tendencies. Our research reveals that self-serving tendencies in attributional behaviour, especially when operationalized as explicit impression-relevant attributional statements (entitlements, enhancements, excuses, causality denials and justifications), are significantly affected by contextual factors with motivational impact and, depending on the context, reflect attributional patterns that are counterintuitive from an informational perspective. The research results also indicate that the self-serving profile of the attributional explanations strongly depends on the nature of the accounting effect explained with ramifications on the listed/unlisted dichotomy and on the manner in which positive news is constructed in the directors’ reports of listed companies.

Picking up the pieces: impression management in the retrospective attributional framing of accounting outcomes

This paper explores the relative use of performance explanations in terms of the internal logic of the financial accounting model, relating (intermediary) accounting effects and categories (accounting explanations) in annual report narratives. Different communicative aspects of accounting explanations are discussed and lead us to qualify accounting explanations as implicitly defensive in nature. The notion of accounting bias, as a tendency to explain negative performances more in technical accounting terms and positive performances more in strict cause-effect terminology, is introduced. The empirical study examines the presence of accounting bias in annual reports and investigates, from an impression management perspective, the impact of three organizational factors (public exposure, short-term profitability, stability of performances) on the use of accounting explanations.

Walter Aerts

Papers

Media legitimacy and corporate environmental communication

Corporate environmental disclosure, financial markets and the media: An international perspective

Intra-industry imitation in corporate environmental reporting: An international perspective

Picking up the pieces: impression management in the retrospective attributional framing of accounting outcomes

On the use of accounting logic as an explanatory category in narrative accounting disclosures