Value Relevance of Stakeholder Engagement: The Influence of National Culture (original) (raw)
Related papers
Contemporary Accounting Research, 2002
Recent research has found that the value-relevance of accounting variables depends not only on whether a country's accounting rules are code-law oriented or common-law oriented, but also on the reporting incentives created by the legal and business environment in which a firm operates. Therefore, for example, the earnings of firms in some countries with common-law oriented rules but with code-law incentives have more code-law-type characteristics. We further this research by examining whether this is true for firms facing the same accounting regime and institutional environment but different stakeholder-related incentives. We find significant stakeholder-related incentives across 23 Japanese firms listed in the United States and 23 Japanese firms not listed in the United States that are matched by industry and size. Although these firms face the same institutional environment and the same accounting regime, consistent with the differences in stakeholder-related incentives, the earnings and book values of the firms listed in the more shareholder-oriented U.S. markets have significantly more explanatory power for market value than those for firms not cross-listed in the United States. These findings are unaffected by whether the reports are based on consolidated or parent-only accounting or whether they are based on U.S. or Japanese GAAP, emphasizing the potential influence of reporting incentives at all levels on the effect of standardization, conversion, or harmonization of accounting methods globally.
Effects of Stakeholder Engagement and Corporate Governance on Integrated Reporting Disclosure
2020
Integrated reporting (IR), one of the latest developments in organizational reporting practices, collates important financial and non-financial information in an integrated and concise manner. This study aims to investigate the effects of stakeholder engagement and corporate governance on IR disclosure. In this study, stakeholder engagement was proxied by ownership concentration, the effective tax rate, leverage, and employee compensation, while corporate governance was proxied by the independent board of directors, frequency of audit committee meetings, and gender diversity. Using purposive sampling methods, the sample was selected from a population of companies listed on the LQ45 Index of the Indonesian Stock Exchange. A total of 22 companies that were consistently listed on the LQ45 index during the period 2013–2016 were selected. Panel data regression was employed to analyze the collected data. The results show that only employee compensation had a significant positive effect on...
2021
The aim of the study was to analyze the influence of the dimensions of national culture on the relationship between corporate governance (CG) and earnings management (EM). There is evidence that in certain cultural contexts CG mechanisms appear to be ineffective in minimizing EM. Studies on governance and its influence on accounting information quality can help market participants make better decisions. It is important to include the cultural context in this relationship as it sheds light on an aspect that has hardly been explored in the research, which can improve the informational environment of organizations. In practical terms, the results may contribute to organizations paying more attention to the cultural influence of countries when implementing or improving their governance mechanisms, with the aim of making them more effective in aligning interests and monitoring behaviors in organizations. Moreover, market participants may require alterations in these mechanisms in more in...
Review of Managerial Science, 2010
In the growing debate about stakeholder values, there has been little discussion about information overload or whether the requested disclosures can be effectively used. Stakeholder advocates call for complicated and massive environmental and related social disclosures while not considering how information overload might affect the discourse about corporate performance. Stakeholders, including shareholders, plead for more transparency in financial statements, management discussion and analysis (MDA), and other corporate disclosures. As we know, shareholders and boards of directors are most concerned with the 'Holy Trinity' of earnings per share, dividends and market value changes. We believe that managers and stakeholders involved in performance evaluations have multiple interests that extend beyond traditional shareholder value measures. We note that the Balanced Scorecard (BSC) was developed as one tool to reflect and communicate these multiple measures. We test how managers use (or ignore) multiple performance measures and we posit that stakeholders will face many of the same constraints when using and processing multiple disclosures including Corporate Social Reports (CSR), environmental, or similar disclosures. While we do not directly test a wide variety of stakeholder disclosures, we examine eight (four for a single subject) shareholder values (financial measures) and four stakeholder values (nonfinancial measures). The eight measures included in our research instruments serve as proxies for the multiple concerns that might be of interest to many
This paper examines the shareholder value orientation of modern public corporations and argues that employees as well as shareholders need voice. As firms increasingly operate on a worldwide basis, they tend to play out different locations against each other leading to an imbalance in the role of different stakeholder groups. Well-established co-determination mechanisms in countries like Germany are challenged by the threat of relocation of corporate activities to other countries and work relationships are changing from long-term to short-term perspectives. The aim of this paper is to analyse internationally operating modern public corporations from an agency theory point of view with the focus on the role of shareholders, managers and employees. The economic reasoning shows that the employees' voice from a strategic perspective should be listened to also in institutional environments that do not force firms to do so.
KINERJA
This research is important to do to find out the factors that affect the firm value. Therefore, researchers want to examine the effect of ADCE and environmental performance on firm value. Researchers used the 2016 GRI standards to measure environmental performance. The results of this study are expected to add/strengthen empirical evidence regarding legitimacy theory and the triple bottom line concept as well as deepen knowledge about what factors can affect firm value, which can be used as additional references for research. in the future and hopes to add to the company's initiatives in preserving the environment. This study provides the following conclusions accounting disclosure Carbon emissions have a negative effect on firm value and environmental performance has a positive effect on firm value. This means that if the environmental performance of a company is getting better, it can increase the value of the company because investors will give a positive response by buying c...
Earnings Management and Cultural Values
American Journal of Economics and Sociology, 2011
Using theory and empirical data from social psychology to measure for cultural differences between countries, this research studies the effect of individualism, defined as the degree to which individuals are integrated into groups (Hofstede 1980), and egalitarianism, defined as a society's cultural orientation with respect to intolerance for abuses of market and political power (Schwartz 1994, 2004) on earnings management. This research finds a significant cultural influence on earnings management. Specifically, the results show that countries scoring high on individualism tend to have lower levels of earnings management. Using the Schwartz (1994, 2004) framework, this study finds that egalitarianism is negatively related to earnings management. The analysis shows that, besides the formal investor protection, it is relevant to consider cultural differences to explain earnings management. This analysis also supports the idea that culture may be an important element in the discussion of global convergence towards a single corporate governance model, or the implementation of corporate governance codes inspired by codes from societies with different cultural values.
The Effect of Institutional and Cultural Factors on the Perceptions of Earnings Management
Journal of International Accounting Research, 2010
In this study we examine the effect of stakeholder orientation versus shareholder orientation, and the level of cultural secrecy on individuals' perceptions of earnings management practices. Examining perceptions from 1,260 participants from 13 countries indicates that individuals from stakeholder-oriented institutional backgrounds were less accepting of earnings management, including both accounting earnings management and operating earnings management activities, than participants from shareholder-oriented institutional backgrounds, and that individuals from secretive cultures were more accepting of both types of earnings management activities. Our findings provide evidence of the anticipated perceptual differences across countries with respect to earnings management and suggest the need for further research linking perceptions to reported earnings management measures.
Cultural Determinants of Corporate Governance: A Multi-Country Study
Internext
The purpose of this study was to investigate if the culture of countries influences earnings management practices. Earnings management (EM) was chosen as a Corporate Governance mechanism. Methodology: We selected the Earnings Management proxies from Leuz et al. (2003). We adopted Hosftede´s cultural dimensions: power distance, individualism, uncertainty avoidance and long term orientation. The sample comprised companies listed in 2016 in the stock markets of Brazil,
The debate on shareholder value versus stakeholder orientation is more than ever an issue, particularly, since the burst of the internet bubble and corporate scandals in the United States have scrutinized prevalent management practices. There are also some arguments that the shareholder model will prevail due to the globalization of capital markets and the growing power of institutional investors. This paper addresses the issue of shareholder value versus stakeholder orientation in firms. It provides new evidence of CEOs' preferred orientation across countries. The findings of our study indicate that American and British CEOs favor maximizing shareholder value and European CEOs focus on engaging with the stakeholders. In addition a case study of Shell in the 1990s is presented indicating that firms are able to achieve outstanding returns for their shareholders in the long run not despite but because of their stakeholder orientation.