The Association between Disclosure, Distress, and Failure

Journal of Business Ethics 75 (3):301-314 (2007)
  Copy   BIBTEX

Abstract

The quality of corporate disclosures has drawn increasing levels of criticism from Congress and the SEC. A subject of particularly intense scrutiny and action is the Management’s Discussion and Analysis (MD&A). This narrative, intended to provide an inside perspective on the reported results of the firm, is particularly important when attempting to evaluate the investment prospects of the marginal or poorly performing firm. However, managers may restrict the information content of the disclosure, raising potential concerns about ethical behavior. In this study, we employ a proprietary instrument to measure the quality of MD&A disclosures for a sample of firms entering financial distress. We evaluate the disclosure behavior of these firms in an effort to determine whether changes in the disclosure appear to be motivated primarily by economic or ethical concerns. We find, on average, that firms increase disclosure quality in the year of initial distress. However, sustained increases in disclosure quality are limited to firms that subsequently recover from the distress. The results suggest that observed changes in disclosure are driven primarily by economic considerations, rather than ethical ones, especially in good economic times.

Links

PhilArchive



    Upload a copy of this work     Papers currently archived: 89,685

External links

Setup an account with your affiliations in order to access resources via your University's proxy server

Through your library

Similar books and articles

The feeling of pain and the emotion of distress.Eric A. Salzen - 2002 - Behavioral and Brain Sciences 25 (4):471-471.
Influences on the Scope of Corporate Disclosure Programs: Preliminary Findings.Cynthia Clark Williams - 2007 - Proceedings of the International Association for Business and Society 18:118-120.
Firm performance, corporate ownership, and corporate social responsibility disclosure in China.Wei Luo Qi Li - 2013 - Business Ethics, the Environment and Responsibility 22 (2):159-173.
Not und die Grenzen der Moral.Simon Derpmann - 2014 - Deutsche Zeitschrift für Philosophie 62 (6):1138-1152.
Moral Distress in Healthcare.Judith Andre - 2002 - Bioethics Forum 18 (1-2):44-46.
The taint of shame: Failure, self-distress, and moral growth.Johann A. Klaassen - 2001 - Journal of Social Philosophy 32 (2):174–196.

Analytics

Added to PP
2009-01-28

Downloads
37 (#370,305)

6 months
1 (#1,016,089)

Historical graph of downloads
How can I increase my downloads?