Shareholder Wealth Effects of Modern Slavery Regulation

Cousins, Paul D.; Dutordoir, Marie; Lawson, Benn; Neto, Joao Quariguasi Frota

doi:10.1287/mnsc.2019.3456

Cited by 65 publications

(44 citation statements)

References 88 publications

(127 reference statements)

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“…The sector has, sometimes literally, adopted a template approach to reporting. While this denies stakeholders the opportunity to effectively scrutinise organisations' approaches, it also impedes the ability of those universities which see themselves as taking the legislation seriously from gaining the competitive advantage that Cousins et al (2017) see in those private sector firms that engage extensively with the Act and which experimentalist governance envisages.…”

Section: Discussionmentioning

confidence: 99%

Organisational responses to mandatory modern slavery disclosure legislation: a failure of experimentalist governance?

Rogerson¹,

Crane²,

Soundararajan³

et al. 2020

AAAJ

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PurposeThis paper investigates how organisations are responding to mandatory modern slavery disclosure legislation. Experimentalist governance suggests that organisations faced with disclosure requirements such as those contained in the UK Modern Slavery Act 2015 will compete with one another, and in doing so, improve compliance. The authors seek to understand whether this is the case.Design/methodology/approachThis study is set in the UK public sector. The authors conduct interviews with over 25% of UK universities that are within the scope of the UK Modern Slavery Act 2015 and examine their reporting and disclosure under that legislation.FindingsThe authors find that, contrary to the logic of experimentalist governance, universities' disclosures as reflected in their modern slavery statements are persistently poor on detail, lack variation and have led to little meaningful action to tackle modern slavery. They show that this is due to a herding effect that results in universities responding as a sector rather than independently; a built-in incapacity to effectively manage supply chains; and insufficient attention to the issue at the board level. The authors also identity important boundary conditions of experimentalist governance.Research limitations/implicationsThe generalisability of the authors’ findings is restricted to the public sector.Practical implicationsIn contexts where disclosure under the UK Modern Slavery Act 2015 is not a core offering of the sector, and where competition is limited, there is little incentive to engage in a “race to the top” in terms of disclosure. As such, pro-forma compliance prevails and the effectiveness of disclosure as a tool to drive change in supply chains to safeguard workers is relatively ineffective. Instead, organisations must develop better knowledge of their supply chains and executives and a more critical eye for modern slavery to be combatted effectively. Accountants and their systems and skills can facilitate this development.Originality/valueThis is the first investigation of the organisational processes and activities which underpin disclosures related to modern slavery disclosure legislation. This paper contributes to the accounting and disclosure modern slavery literature by investigating public sector organisations' processes, activities and responses to mandatory reporting legislation on modern slavery.

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Section: Discussionmentioning

confidence: 99%

Organisational responses to mandatory modern slavery disclosure legislation: a failure of experimentalist governance?

Rogerson¹,

Crane²,

Soundararajan³

et al. 2020

AAAJ

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show abstract

“…Hahn & Kühnen, 2013). A particularly revealing intersection of law and business can be found in analysis of stock market reactions to modern slavery "shocks" such as new legislation, scandals, and other announcements (Cousins et al, 2020).…”

Section: Lawmentioning

confidence: 99%

Modern Slavery in Business: The Sad and Sorry State of a Non-Field

Crane²,

et al. 2020

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“Modern slavery,” a term used to describe severe forms of labor exploitation, is beginning to spark growing interest within business and society research. As a novel phenomenon, it offers potential for innovative theoretical and empirical pathways to a range of business and management research questions. And yet, development into what we might call a “field” of modern slavery research in business and management remains significantly, and disappointingly, underdeveloped. To explore this, we elaborate on the developments to date, the potential drawbacks, and the possible future deviations that might evolve within six subdisciplinary areas of business and management. We also examine the value that nonmanagement disciplines can bring to research on modern slavery and business, examining the connections, critiques, and catalysts evident in research from political science, law, and history. These, we suggest, offer significant potential for building toward a more substantial subfield of research.

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“…The response to modern slavery risk in a growing number of jurisdictions has been to introduce new laws that encourage greater corporate ownership of the problem (Stevenson & Cole, 2018; Caruana, Crane, Gold & LeBaron, 2020; Cousins, Dutordoir, Lawson & Quariguasi Frota‐Neto, 2020; Pinnington, 2021). These laws have required major firms to report on the extent that modern slavery risk exists in their supply chains, and their efforts to reduce risk.…”

Section: Introductionmentioning

confidence: 99%

The role of psychological distance in organizational responses to modern slavery risk in supply chains

Simpson

Segrave

Quarshie

et al. 2021

J of Ops Management

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Modern slavery is used to describe forms of coercive labor exploitation that affect more than 40 million persons globally. Such practices are difficult to identify given they exist in the informal economy, and involve vulnerable individuals. Addressing modern slavery by organizations requires awareness of its context and complexities. While corporations have increasingly sought to manage modern slavery risk in their supply chains, their understanding of what modern slavery is and what should be managed remains limited. We argue a key problem with firms’ efforts to manage modern slavery risk is that it is a psychologically distant concept for them. We apply construal level theory to explore how organizations’ psychological distance from modern slavery risk affects their management of risk. We interviewed purchasing executives at 41 global organizations in Australia, Finland, and the U.S and identified four approaches to managing modern slavery risk at different levels of psychological distance. We also identified that conflicts between organizations' approaches to risk and what they identify in their operating environment, precedes important construal shifts that help to improve organizational understanding of labor‐related risk. We highlight ways that organizations' understanding of modern slavery risk plays a role in their governance of such risk in supply chains.

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Shareholder Wealth Effects of Modern Slavery Regulation

Cited by 65 publications

References 88 publications

Organisational responses to mandatory modern slavery disclosure legislation: a failure of experimentalist governance?

Organisational responses to mandatory modern slavery disclosure legislation: a failure of experimentalist governance?

Modern Slavery in Business: The Sad and Sorry State of a Non-Field

The role of psychological distance in organizational responses to modern slavery risk in supply chains

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