Hide-and-seek in corporate disclosure: evidence from negative corporate incidents

Abstract

PurposeThis paper investigates the legitimacy tactics used in the annual reports of UK listed companies in the aftermath of major corporate scandals.Design/methodology/approachWe carried out a content analysis of annual reports of 19 companies that have been involved in corporate scandals with a view to understand how firms communicate negative scandals affecting them.FindingsThe findings reveal that firms use a wide range of legitimisation strategies in the manner that contribute to shape disclosure communications concerning negative incidents. For instance, some firms may offset the negativity linked to an incident by rendering such explanations amidst positive information.Originality/valueContrary to earlier studies conducted on accounting scandals, the authors incorporated extensive corporate scandals such as human rights violations, controversies concerning child labour, environmental scandals, corruption, financial embezzlement and tax evasion.