Purpose -The purpose of this paper is to determine whether the presentation medium of corporate social and environmental web site disclosure has an impact on user trust in such disclosure, and to examine the effect of media richness on user perception about corporate social and environmental responsibility. Design/methodology/approach -The paper's methodology is a three-by-two between-subjects design experiment, manipulating presentation medium and industry type. Participants viewed social and environmental web site disclosures and completed and communicated their perceptions of trust and the experimental companies' corporate social responsibility. Findings -The presentation medium richness of social and environmental web site disclosures is positively associated with: trusting intentions, but not trusting beliefs, of web site users; and user perception of corporate social and environmental responsibility. Research limitations/implications -As with all controlled experiments, the research design focused on internal validity to maintain control over the task design, manipulation, and measurement of variables. While this required trade-offs with external validity, the task was designed based on real-world scenarios to maintain high levels of external validity within the experimental setting. Practical implications -The paper provides evidence that corporations could use enhanced web-based technology to potentially mislead users regarding their performance in the social domain. Originality/value -The paper extends the visual disclosure literature by examining the richness of the image/visual media, and investigates whether user perceptions are impacted by the variations in its richness.
SUMMARY
The “expectations gap” refers to differences in views of auditors and users regarding the extent of assurance obtained from auditing procedures. One aspect of the expectations gap considered by prior research is whether users differentiate the level of assurance provided by different audit procedures. We extend that research by studying whether investors understand that information outside of the financial statements, in the 10-K as well as on corporate websites, is not audited. This research is important, as the Public Companies Accounting Oversight Board currently is considering proposals aimed at clarifying or expanding the auditor's responsibility for that information. We surveyed professional and nonprofessional investors, and find that professionals are more likely than nonprofessionals to correctly identify which 10-K components are audited. However, many investors in both groups believe that information outside of the financial statements is audited when in fact it is not. We also find some evidence that investors use certain information categories more often when they believe that the information is audited. Also, for both investor groups, responses concerning whether currently unaudited information categories should be audited suggest an unmet demand for greater assurance on information outside of the financial statements. Our results support proposals for greater clarity in the audit opinion concerning the nature of procedures performed on information outside of the financial statements. Further, our findings imply that additional assurance on that information might be considered useful.
In 2008, the SEC issued a mandate requiring the use of interactive tagged data (i.e., eXtensible Business Reporting Language, or XBRL) for all public companies' filings of their annual financial statements. However, the SEC put the mandates in place only for the financial statements and accompanying notes. The SEC specifically excluded the use of interactive tagged data for most narrative aspects of annual reports, including Management's Discussion and Analysis (MD&A), deeming current taxonomies for interactive data tagging inadequate. This study leverages upon the efforts of the Enhanced Business Reporting Consortium (EBRC) to develop a more robust taxonomy for the MD&A. The EBRC effort consists of two parts: (1) expanding the scope of qualitative disclosures, and (2) integrating all of the interactive data tags used by companies during the voluntary disclosure period predating the SEC mandate into a comprehensive set of tags for existing MD&A disclosures. Of particular interest in this research is the first aspect of the EBRC effort—an analysis of professional and nonprofessional investors' perspectives on the value of proposed qualitative disclosures and areas in which such investors would desire additional disclosures. We conducted nine focus groups with professional and nonprofessional investors to elicit their information preferences, applying procedures consistent with the “information requirements definition” phase of systems design. Results show that participants are supportive of the EBRC's proposed 31 categories of qualitative disclosures, but also identify 15 additional categories as useful. We augment the focus groups with a survey of 286 investors to assess the relative value of the combined 46 categories. All 46 items appear to be desirable across investor participants. The results have implications for ongoing efforts to expand taxonomies for qualitative data disclosure and for standard-setters considering extensions to MD&A reporting requirements.
Data Availability: Contact the corresponding author.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.