Hide-and-Seek in Corporate Disclosure: Evidence from Negative Corporate Incidents

Rudkin, Bradley and Kimani, Danson and Ullah, Subhan and Ahmed, Rizwan and Farooq, Syed Umar (2018) Hide-and-Seek in Corporate Disclosure: Evidence from Negative Corporate Incidents. Corporate governance. ISSN 1472-0701

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Abstract

This paper scrutinizes the legitimacy tactics employed in the annual reports of UK listed companies after their major corporate scandals. For a sample consisted of 19 companies that are indulged in corporate scandals, the content analysis approach was used to comprehend how corporate disclosure is used as an intermediary to rationalize corporate actions subsequent to corporate scandals. The findings reveal that firms use a wide range of legitimisation strategies in the manner that contribute to shape disclosure communications concerning negative incidents. We discovered that disclosure blur is used by the firms in times when there is an urge intended to create management by the firms for its stakeholders. For instance, some firms may offset the negativity linked to an incident by rendering such explanations amidst positive information. Contrary to earlier studies conducted on accounting scandals, we incorporated extensive corporate scandals such as human rights violations, controversies pertinent to child labour, environmental scandals, corruption, financial embezzlement, and tax evasion.

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