The Role of Users’ Engagement in Shaping Financial Reporting: Should Activists Target Accounting More?

Accounting and Business Research, Forthcoming

52 Pages Posted: 25 Mar 2021 Last revised: 27 Apr 2021

See all articles by Beatriz Garcia Osma

Beatriz Garcia Osma

Universidad Carlos III de Madrid - Department of Business Administration; European Corporate Governance Institute (ECGI)

Cristina Grande-Herrera

City, University of London - The Business School (formerly Cass)

Date Written: March 23, 2021

Abstract

We define accounting engagement as stakeholders’ actions taken with the intention of influencing corporate reporting. Using this definition, we review the literature on such activism and discuss avenues for research. The evidence reviewed suggests accounting engagement is rare. We reflect on the reasons of this, given evidence on increasing overt engagement on other corporate issues, such as managerial compensation and governance, social, and environmental responsibility. Both information production and information acquisition costs have decreased over time, raising further questions about why engagement has not increased. We consider potential reasons linked to concerns over whether financial reporting meets users’ information needs, particularly, given the emergence of new users and the role of new technologies in the diffusion and processing of information. These concerns have accompanied claims of increasing complexity of financial accounting and the threat of information overload.

Keywords: Accounting engagement, activism, information production costs, information acquisitions costs; users’ information needs, information complexity, information overload

JEL Classification: G23, G32, G34, M41

Suggested Citation

Garcia Osma, Beatriz and Grande-Herrera, Cristina, The Role of Users’ Engagement in Shaping Financial Reporting: Should Activists Target Accounting More? (March 23, 2021). Accounting and Business Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3764063 or http://dx.doi.org/10.2139/ssrn.3764063

Beatriz Garcia Osma (Contact Author)

Universidad Carlos III de Madrid - Department of Business Administration ( email )

Calle Madrid 126
Getafe, Madrid, Madrid 28903
Spain

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Cristina Grande-Herrera

City, University of London - The Business School (formerly Cass) ( email )

Northampton Square
London, EC1V 0HB
United Kingdom

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