Abstract
Using a difference-in-differences methodology, this paper finds that greater stakeholder orientation due to the adoption of non-shareholder constituency statutes, which allow directors to consider non-shareholder stakeholders' interests in decision making, significantly reduces discretionary accruals. The main effect is more pronounced for firms with greater tension between shareholders and stakeholders, and with higher information acquisition costs for the board. Further analysis shows that stakeholder orientation increases the value-relevance of earnings, and curtails real earnings management to some extent. Overall, my findings indicate that improved financial reporting quality can be a specific channel through which stakeholder orientation increases shareholder value.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
