Voluntary social disclosures by large UK companies
Year: 2004
Type: article
Abstract: An extensive conceptual literature that examinesthe motives for, and consequences of, firmsmaking voluntary disclosures, emphasises thesignificance of legal, competitive, strategic, andfinancial factors (Grossman 1981, Milgrom 1981,Verrecchia 1983, Trueman 1997, Hughes Sthose drawing on economic theory; and thosebased on socio-political theories. These sharecommon ground in that they all suggest thatsocial disclosures are a significant strategic tool inthe management of relationships between thecompany and stakeholder groups. According tothe decision-usefulness approach, corporate dis-closures are attempts to remove informationalasymmetries between the firm and external agents,primarily agents in the investment community.Empirical work that subscribes to this view mostcommonly attempts to evaluate the impactdisclosures have on stock prices (e.g. Shane &Spicer 1983), but with broadly inconclusiveresults. Economic approaches propose that socialdisclosures are pre-emptive steps to mitigateadverse regulatory or legislative pressures in thefuture. Managers are motivated to make disclo-sures of this kind because the failure to do so mayreduce their discretion over future investmentopportunities (Watts & Zimmermann 1978, Shane& Spicer 1983). The socio-political approaches arethose ‘set within a framework of assumptionsabout ‘political economy’’ (Gray et al. 1995: 52).
Authors: Stephen Brammer, Stephen Pavelin
Institutions: University of Bath, University of Reading
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2059945501