Managing Corporate Social and Environmental Disclosure: An Accountability vs. Impression Management Framework

Abstract

Institutional environment demands from organizations to be accountable for their social and environmental actions and to provide information allowing the assessment of their long-term prospects for profitability may lead organizations to adopt Impression Management (IM) tactics to manage perceptions. Consequently, organizations may provide accounts demonstrating that they are good corporate citizens and possess the intangible assets required for future good financial performance. Although organizations have increased their corporate social reporting, the quality and reliability of those reports have been questioned. The literature suggests that these disclosures tend to be selective and biased, and do not enhance corporate accountability. This study proposes a formal conceptual framework linking IM, social and environmental accountability, financial performance, and organizational legitimacy. The arguments in this study are of economic, societal, and ethical concern, as IM behaviors may undermine the transparency of social and environmental reporting, and the decoupling between the economic and social image offered by companies through reporting and the reality. These insights also point at the complexities for organizations in dealing with accountability to all stakeholders. The conceptual framework proposed is useful for future studies aiming at understanding how organizations use IM in their corporate social reporting in the accountability process.

Board Composition and Social & Environmental Accountability: A Dynamic Model Analysis of Chinese Firms

“…In the current era, organizations are expected to be accountable and they need to provide accounts demonstrating that they are good corporate citizens and possess the intangible assets required for future good financial performance [41]. Social and environmental accountability (EA) means that "one is responsible for one's own actions and the consequences of those actions that affect the natural environment and wider society" [42].…”

Sustainable Corporate Governance: The Impact Factors for Top Consulting Engineering Companies in Taiwan

“…Therefore, practical principles prohibit managers from working at both listed companies and their affiliated companies concurrently. A parent company and its affiliated companies should not hire the same managers due to problems with benefit transfer [25][26][27][28].…”

“…In conclusion, the aspects and number of questions asked in this questionnaire are as follows: protecting shareholders' rights and interests (6 questions), treating shareholders equitably (8 questions), strengthening the structure and operation of the board of directors (8 questions), increasing information transparency (8 questions), implementing corporate social responsibility (8 questions), and setting up a firewall (8 questions)-46 questions in total. The relationships between the variables and their corresponding hypothesis are based on the concept of structural equation modeling (SEM), the 9 hypotheses, and the literature review suggestions discussed in Section 2.3 [7,[25][26][27][28]. For example, in Figure 1, Hypothesis 1 suggests that PR has a position with CF, using questions PR1-PR6.…”

“…For example, in Figure 1, Hypothesis 1 suggests that PR has a position with CF, using questions PR1-PR6. All questions were mainly derived from the suggestions of the articles in the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies [7] and partially from the references [25][26][27][28]. The full names for each question in the sequence are as follows: minute disclosure (PR1), director attendance (PR2), chairperson attendance (PR3), denied motion (PR4), no dividends to board directors (PR5), less than 50% of shares held by board directors (PR6), shareholder meetings as scheduled (TE1), agenda transparency for shareholder meetings (TE2), financial statement transparency for shareholder meetings (TE3), English agendas for shareholder meetings (TE4), English financial statement transparency for shareholder meetings (TE5), execution report for previous shareholder meetings (TE6), information obstacles (TE7), single shareholder weighted over 1/3 (TE8), female directors (SO1), extra directorships (SO2), auditing availability for the board (SO3), governance availability for the board (SO4), risk management availability for the board (SO5), performance availability for the board (SO6), training availability for the board (SO7), property management availability for the board (SO8), timely disclosure of financial statements (IT1), English financial statement availability (IT2), revised edition for financial statements (IT3), financial flaws in financial statements (IT4), industrial trend statements (IT5), disclosure for major shareholders (IT6), financial information disclosure on websites (IT7), investor conferences twice a year (IT8), corporate division for social responsibility (FC1), social responsibility plan setup (FC2), disclosure for social responsibility results (FC3), disclosure for promoting employees' welfare (FC4), disclosure of waste quantities (FC5), strategy for reducing waste (FC6), disclosure of interest avoidance (FC7), disclosure of illegal and unethical matters (FC8), firewall among all departments and divisions (CF1), avoidance of professional manager concurrence (CF2), regulation of directors' personal conduct (CF3), secrecy of business knowhow among all internal departments (CF4), avoidance of benefit transfer (CF5), firewall for subsidiary companies (CF6), reporting channel for misconduct (CF7), and protection for reporters (CF8).…”

The Pitfall of Selective Environmental Information Disclosure on Stock Price Crash Risk: Evidence From Polluting Listed Companies in China

“…Especially in developing countries, the problem of environmental information disclosure is more prominent and selective disclosure is more serious (Fonseka et al, 2019). Martins and Gomes (2021) defined selective environmental information disclosure as corporate impression management. Enterprises voluntarily choose environmental information disclosure to distort investors' evaluation (Neu et al, 1998).…”