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Showing papers on "Signalling theory published in 2014"


Journal ArticleDOI
TL;DR: In this paper, a content analysis finds that most strategic management signalling theory studies have not fully leveraged separating equilibrium, which occurs when a signal's expectations are confirmed through experience, and it presents two possible paths for future research.
Abstract: Actors within organizations commonly must make choices armed with incomplete and asymmetrically distributed information. Signalling theory seeks to explain how individuals are able to do so. This theory's primary predictive mechanism is ‘separating equilibrium’, which occurs when a signal's expectations are confirmed through experience. A content analysis finds that most strategic management signalling theory studies have not fully leveraged separating equilibrium. This presents two possible paths for future research. First, some researchers may wish to incorporate separating equilibrium. We illustrate how doing so can uncover new relationships, generate novel insights, and fortify the theory's application. Others who want to theorize about signals, but not examine separating equilibrium, could integrate ideas from signalling theory with other information perspectives. Here a signal becomes one stimulus among many that corporate actors interpret and act upon. We provide research agendas so strategy scholars can apply signalling theory most effectively to meet their research objectives.

296 citations


Journal ArticleDOI
TL;DR: In this article, the authors used an online content analysis based on the International Voluntourism Guidelines for Commercial Operators to understand the use of responsibility as a market signalling tool and found that responsibility is not used for market signalling; preference is given to communicating what is easy, and not what is important.
Abstract: Volunteer tourism has been heavily criticised for its negative consequences on destinations and volunteers, often the direct result of unrealistic demand-led marketing and lack of consideration for the environmental and social costs of host communities. While some industry participants have responded through adherence to best practice, little information or support is available about how to responsibly market volunteer tourism. This research uses an online content analysis based on the International Voluntourism Guidelines for Commercial Operators to understand the use of responsibility as a market signalling tool. Five influential web pages of eight organisations are scored across 19 responsibility criteria and compared against the organisation’s legal status, product type and price. We find that responsibility is not used for market signalling; preference is given to communicating what is easy, and not what is important. The status of the organisation is no guarantee of responsible practice, and price and responsibility communications display an inverse relationship. We conclude volunteer tourism operators are overpositioning and communicating responsibility inconsistently, which highlights greenwashing, requiring at least industry-wide codes of practice, and at best, regulation. This paper reflects on its methodological limitations, and on its practical achievements in encouraging change within some of the organisations examined.

115 citations


Journal ArticleDOI
TL;DR: In this paper, the authors provide an extensive and critical overview of the theoretical perspectives used in the accounting disclosure literature including economic theories, political and social theories, including positive accounting theory, agency theory, signalling theory, political economy theory (PET), stakeholder theory, legitimacy theory and contingency theory.
Abstract: Purpose – The purpose of this paper is to provide an extensive and critical overview of the theoretical perspectives used in the accounting disclosure literature including economic theories, political and social theories. Design/methodology/approach – The paper reviews and discusses in details the positive accounting theory (PAT), agency theory, signalling theory, political economy theory (PET), stakeholder theory, legitimacy theory and contingency theory to identify the situations suit each of these perspectives. Findings – The main finding shows that there is no universal theory applicable for all situations or societies. For example, PAT is probably used when a corporation believes that its primary responsibility is to use its resources and engage in activities designed to maximise its profits. On the other hand, the PET seems to better explain why some corporations appear to respond to government or public pressure for information about their social impact. The agency theory provides the required fram...

40 citations


Journal Article
TL;DR: In this paper, the authors tested the theoretical basis of capital structure in Ghana and Africa at large and found that the pecking order and signalling theories are significantly applied by financial institutions in Ghana.
Abstract: Studies on the nature of capital structure of firms worldwide have focused on its impact on financial performance and its determinants, only few studies have tried to empirically test the theoretical basis of capital structure most especially in Ghana and Africa at large. From this backdrop, this study tested the pecking order theory which is of the view that there is a financing order and the signalling theory which suggests that a financial institution’s financing strategy sends diverse signals to potential lenders about the financial dependence. The results indicate that the pecking order and signalling theories are significantly been applied by the financial institutions in Ghana. This conclusion is arrived at after the panel data methodology was employed in the model estimation. The study therefore suggest that in as much as possible financial institutions should conform to the pecking order theory, they should implement policies which would increase their cash flow as it signals to investors that the firms are financially dependent. Keywords: Financial institution, Pecking Order Theory, Signalling Theory, Panel JEL: G3, M00, M1

8 citations


Journal ArticleDOI
TL;DR: The authors examined practices regarding signalling for disclosure of external capital, the most disclosed category of intellectual capital, in annual reports of a sample of listed firms in Sri Lanka, a developing nation.
Abstract: Much of the discussion of voluntary disclosure of external capital in annual reports entails only limited examination of signals for capital accumulation. Using the method of content analysis, this paper examines practices regarding signalling for disclosure of external capital, the most disclosed category of intellectual capital, in annual reports of a sample of listed firms in Sri Lanka, a developing nation. Eleven case study interviews from the sample firms explore the role of signalling in capital accumulation. Findings reveal that signals differ between industry sectors in convincing stakeholders to advance capital accumulation.

1 citations


Posted Content
TL;DR: The authors examined practices regarding signalling for disclosure of external capital, the most disclosed category of intellectual capital, in annual reports of a sample of listed firms in Sri Lanka, a developing nation.
Abstract: Much of the discussion of voluntary disclosure of external capital in annual reports entails only limited examination of signals for capital accumulation. Using the method of content analysis, this paper examines practices regarding signalling for disclosure of external capital, the most disclosed category of intellectual capital, in annual reports of a sample of listed firms in Sri Lanka, a developing nation. Eleven case study interviews from the sample firms explore the role of signalling in capital accumulation. Findings reveal that signals differ between industry sectors in convincing stakeholders to advance capital accumulation.

1 citations


01 Jan 2014
TL;DR: In this paper, the authors conducted a content analysis of corporate governance disclosures on the annual reports of firms from 2008-2012 and found that large, non-family owned firms with high levels of shareholder dispersion provide greater quantity and higher quality corporate governance disclosure.
Abstract: In 2009, the Capital Markets Development Authority (CMDA) - Fiji’s capital market regulator - introduced the Code of Corporate Governance (the Code). The Code is ‘principle-based’ and requires companies listed on the South Pacific Stock Exchange (SPSE) and the financial intermediaries to disclose their compliance with the Code’s principles. While compliance with the Code is mandatory, the nature and extent of disclosure is at the discretion of the complying entities. Agency theory and signalling theory suggest that firms with higher expected levels of agency costs will provide greater levels of voluntary disclosures as signals of strong corporate governance. Thus, the study seeks to test these theories by examining the heterogeneity of corporate governance disclosures by firms listed on SPSE, and determining the characteristics of firms that provide similar levels of disclosures. We conducted a content analysis of corporate governance disclosures on the annual reports of firms from 2008-2012. The study finds that large, non-family owned firms with high levels of shareholder dispersion provide greater quantity and higher quality corporate governance disclosures. For firms that are relatively smaller, family owned and have low levels of shareholder dispersion, the quantity and quality of corporate governance disclosures are much lower. Some of these firms provide boilerplate disclosures with minimal changes in the following years. These findings support the propositions of agency and signalling theory, which suggest that firms with higher separation between agents and principals will provide more voluntary disclosures to reduce expected agency costs transfers. Semi-structured interviews conducted with key stakeholders further reinforce the findings. The interviews also reveal that complying entities positively perceive the introduction of the Code. Furthermore, while compliance with Code brought about additional costs, they believed that most of these costs were minimal and one-off, and the benefits of greater corporate disclosure to improve user decision making outweighed the costs. The study contributes to the literature as it provides insight into the experience of a small capital market with introducing a ‘principle-based’ Code that attempts to encourage corporate governance practices through enhanced disclosure. The study also assists policy makers better understand complying entities’ motivations for compliance and the extent of compliance.