Judgment and decision making research on CSR reporting in the COVID‐19 pandemic environment

Abstract

Judgment and decision making (JDM) research in accounting focuses on the judgments and decisions of preparers, users and auditors/assurance providers of financial and non‐financial information, including sustainability information. However, the environment in which these judgments are made and how groups interact has changed substantially during the COVID‐19 pandemic, and likely post‐pandemic. We focus on the impact of these changes for corporate social responsibility (CSR) reporting, including managers’ decisions on the preparation and use of CSR information, demand for CSR assurance, and the effect of CSR reports and assurance on investors’ judgments. We then outline implications for the research questions addressed and experimental designs used.

COVID-19 and CSR disclosure: evidence from New Zealand

“…COVID-19 has created a significant challenge for businesses. Disruption of supplies, diminishing profitability and declines in market value have significantly raised questions on companies' ability to keep operating (Humphreys & Trotman, 2021). The ambiguity regarding a company's going concern exacerbates information asymmetries between managers and stakeholders.…”

“…Many companies are experiencing disastrous financial and business performance, supply chain disruption and other issues, a consequence of snap lockdowns and harsh travel restrictions (Donthu & Gustafsson, 2020). Following the arrival of the pandemic, companies have significantly changed their disclosure practices (Cui et al, 2021;Humphreys & Trotman, 2021). This is due to the role played by managerial perceptions regarding the provision of accounting information which includes both financial and non-financial information (Humphreys & Trotman, 2021).…”

“…Following the arrival of the pandemic, companies have significantly changed their disclosure practices (Cui et al, 2021;Humphreys & Trotman, 2021). This is due to the role played by managerial perceptions regarding the provision of accounting information which includes both financial and non-financial information (Humphreys & Trotman, 2021). Since managerial perceptions are largely shaped by the external business environment, far greater uncertainty induced by the COVID-19 outbreak may affect companies' CSR disclosure.…”

“…The far-reaching negative consequences of pandemic-induced uncertainty for businesses have encouraged scholars to investigate many firms' outcomes and experiences. A large proportion of such studies have predominantly concentrated either on the capital market (Bae, El Ghoul, Gong, & Guedhami, 2021;Ding, Levine, Lin, & Xie, 2021;O'Hara & Zhou, 2021) or mapped theoretical perceptions of how COVID-19 affects (1) firm performance (Donthu & Gustafsson, 2020;Goodell, 2020) and (2) companies' social responsibility activities (He & Harris, 2020) and non-financial reporting (Adams & Abhayawansa, 2021;Hassan, Elamer, Lodh, Roberts, & Nandy, 2021;Humphreys & Trotman, 2021). Others empirically investigated the role of assurance providers on COVID-related disclosure (Albitar, Al-Shaer, & Elmarzouky, 2021), and provided evidence about the role of companies' conservative reporting practices in their performance during the COVID-19 outbreak (Cui et al, 2021).…”

Accountability through Sustainability Data Governance: Reconfiguring Reporting to Better Account for the Digital Acceleration

“…In fact, the COVID-19 crisis brought a renovated concern to corporate digitalization [2][3][4] and corporate sustainability as the most suitable means to provide accountability effectively [21,22]. According to research, the integration of sustainable practices into financial reporting will have to become compulsory and more structured in the post-pandemic scenario, with the aim of showing how value is created over time [94], while at the same time proving the internal and external validity of the collected data [95].…”