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 |
|---|---|
| Pages (from-to) | 386-403 |
| Number of pages | 18 |
| Journal | Organization Science |
| Volume | 19 |
| Issue number | 3 |
| DOIs | |
| Publication status | Published - May 2008 |
| Externally published | Yes |
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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
- Management of Technology and Innovation
- Strategy and Management
- Organizational Behavior and Human Resource Management
Cite this
Coming forward : The effects of social and regulatory forces on the voluntary restatement of earnings subsequent to wrongdoing. / Pfarrer, Michael D.; Smith, Ken G.; Bartol, Kathryn M.; Khanin, Dmitry M.; Zhang, Xiaomeng.
In: Organization Science, Vol. 19, No. 3, 05.2008, p. 386-403.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Coming forward
T2 - The effects of social and regulatory forces on the voluntary restatement of earnings subsequent to wrongdoing
AU - Pfarrer, Michael D.
AU - Smith, Ken G.
AU - Bartol, Kathryn M.
AU - Khanin, Dmitry M.
AU - Zhang, Xiaomeng
PY - 2008/5
Y1 - 2008/5
N2 - 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.
AB - 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.
KW - Corporate compliance
KW - Corporate corruption
KW - Corporate deterrence
KW - Corporate governance
KW - Earnings restatements
KW - Informal versus formal sanctions
KW - Public policy
KW - Self-regulation
KW - Voluntary disclosure
UR - http://www.scopus.com/inward/record.url?scp=61349174035&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=61349174035&partnerID=8YFLogxK
U2 - 10.1287/orsc.1070.0323
DO - 10.1287/orsc.1070.0323
M3 - Article
AN - SCOPUS:61349174035
VL - 19
SP - 386
EP - 403
JO - Organization Science
JF - Organization Science
SN - 1047-7039
IS - 3
ER -