Abstract
We investigate the effects of social and regulatory forces on a firm's decision to disclose past wrongdoing by voluntarily restating its earnings. With an eight-year sample of more than 2,500 public firms, including 170 voluntary restaters, we find that firms are more likely to voluntarily restate their earnings in response to informal social pressures from other firms in their industry and less likely to do so in response to formal regulatory sanctions. We also show that the impact of these forces varies with firm status. We contribute to corporate governance and public policy research that examines the effectiveness of "hard" versus "soft" deterrence measures on firm compliance.
Original language | English |
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Pages (from-to) | 386-403 |
Number of pages | 18 |
Journal | Organization Science |
Volume | 19 |
Issue number | 3 |
DOIs | |
Publication status | Published - May 1 2008 |
Keywords
- Corporate compliance
- Corporate corruption
- Corporate deterrence
- Corporate governance
- Earnings restatements
- Informal versus formal sanctions
- Public policy
- Self-regulation
- Voluntary disclosure
ASJC Scopus subject areas
- Strategy and Management
- Organizational Behavior and Human Resource Management
- Management of Technology and Innovation