Corporate social responsibility disclosures and reputation risk management post the banking royal commission: a study of the big four banks

Abstract

Purpose This study aims to explore the use of corporate social responsibility (CSR) disclosures by the “Big Four” Australian banks post the banking royal commission (BRC) to manage their reputational risk. Design/methodology/approach This paper uses a case study approach through a thematic analysis of the Big Four banks’ annual and sustainability reports and uses reputation risk management (RRM) as a conceptual lens to explore the image restoration strategies used by these banks. Findings The study finds that a corrective action strategy was disclosed extensively by all four banks whereby each bank outlined the actions that they were undertaking to correct the deficiencies identified by the BRC. However, the impact of these proposed actions was tampered by the fact that each bank sought to use strategies to reduce the offensiveness of their misdemeanours. It is argued that while disclosure on corrective actions and compensation is useful, an emphasis on reducing offensiveness of actions impacts the effectiveness of banks’ responses and their acceptance of full responsibility for their actions. Research limitations/implications This paper applies the RRM perspective to a recent reputation damaging event, thereby expanding the literature on image restoration strategies used by companies during major incidents. Practical implications This study provides useful insights in relation to the approaches used to manage the reputational risk arising from the BRC. It provides insights into the credibility of information disclosed post an incident and has potential implications for the assurance of such information. Social implications Given the critical importance of the banking industry to modern society, misconduct in this sector needs a closer examination, requiring a greater need for responsibility from its key players. Originality/value This study extends the applicability of the RRM perspective to a social incident and highlights that it is reputation, rather than legitimacy, that is critical when organisations in an industry face extensive public scrutiny. A thematic analysis approach adds value to the methods used for analysing CSR disclosures.

Ladder of analytical abstraction: a constructive map for data analysis a case of voluntary reporting of human capital

“…However, the viability of such a strategy is problematic, as it could risk damaging the organization’s reputation. Thus, a closer examination of the information’s credibility and taking accountability for disclosed information is essential, especially given that the banking sector is significant to the economy and society (Lodhia and Mitchell, 2022).…”

How do Australian female consumers exercise their decision-making power when making financial product decisions? The triad of financial market manipulation, rationality and emotions

“…In 2018, the number of cases involving financial manipulation (such as duplicating charges to consumer accounts, providing consumers with misleading information on insurance premiums and lending rates) was estimated to be around 4,000 (ASIC, 2022). Some studies claim that these unfortunate market conditions show a culture of greed among the banking firms (Keneley, 2020; Lodhia and Mitchell, 2022; Crofts, 2020; Hayne, 2019). This has created emotional vulnerabilities among consumers who may feel powerless when purchasing financial products.…”