Legitimising corporate reputation in times of employee distress through disclosure

Media exposure in the electronic manufacturing services industry in China

Li Zhongtian, Shamima Haque, Larelle Chapple

Research output: Contribution to journalArticle

Abstract


Purpose
This paper aims to examine changes of non-financial voluntary reporting practices over time in response to episodes of employee-related distress. It investigates employee-related disclosures by the four largest electronic manufacturing services firms in China between 2008 and 2013 during a series of employment-related incidents, to investigate how the firms re-legitimate their reputation in response to the media coverage on those incidents.

Design/methodology/approach
A series of employee-related incidents that occurred in 2010-2012 is selected as the focus of this study, with total coverage of employee-related disclosures between 2008 and 2013. These incidents are directly linked to three of the four sample companies: Foxconn, Pegatron and Compal Electronics. Employee-related disclosures in corporate social responsibility (CSR) stand-alone reports are coded by a set of specifically designed instructions, and newspaper articles about employee-related incidents are coded for sentiment. Results are interpreted through two theoretical lenses: the media agenda setting theory and the legitimacy theory.

Findings
Newspapers reported the employee-related incidents in a way detrimental to the legitimacy of firms that directly involved in the selected industry. In the process of legitimation, firms switch between disclosing more employee-related information and reducing disclosures. The self-expectation on organizational legitimacy also affects how CSR reporting is used in legitimation. The employee-related disclosure analysed is closer to symbolic legitimation than substantive legitimation.

Originality/value
This study contributes to reporting practice by showing that employee-related disclosure is largely vacuous and to a greater extent is used as symbolic legitimation. The quality of disclosure requires significant improvement. This study contributes to the literature by using the legitimacy theory to interpret employee-related disclosure in China, addressing inadequate research efforts in the context of social and human rights dimensions of CSR reporting.
Original languageEnglish
Pages (from-to)22-45
Number of pages24
JournalAccounting Research Journal
Volume31
Issue number1
DOIs
Publication statusPublished - 5 Aug 2018

Fingerprint

Distress
China
Electronics manufacturing
Corporate reputation
Disclosure
Media exposure
Employees
Service industries
Incidents
Legitimation
Corporate Social Responsibility
Legitimacy theory
Agenda setting
Industry
Media coverage
Design methodology
Legitimacy
Service firms
Organizational legitimacy
Sentiment

Cite this

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title = "Legitimising corporate reputation in times of employee distress through disclosure: Media exposure in the electronic manufacturing services industry in China",
abstract = "PurposeThis paper aims to examine changes of non-financial voluntary reporting practices over time in response to episodes of employee-related distress. It investigates employee-related disclosures by the four largest electronic manufacturing services firms in China between 2008 and 2013 during a series of employment-related incidents, to investigate how the firms re-legitimate their reputation in response to the media coverage on those incidents.Design/methodology/approachA series of employee-related incidents that occurred in 2010-2012 is selected as the focus of this study, with total coverage of employee-related disclosures between 2008 and 2013. These incidents are directly linked to three of the four sample companies: Foxconn, Pegatron and Compal Electronics. Employee-related disclosures in corporate social responsibility (CSR) stand-alone reports are coded by a set of specifically designed instructions, and newspaper articles about employee-related incidents are coded for sentiment. Results are interpreted through two theoretical lenses: the media agenda setting theory and the legitimacy theory.FindingsNewspapers reported the employee-related incidents in a way detrimental to the legitimacy of firms that directly involved in the selected industry. In the process of legitimation, firms switch between disclosing more employee-related information and reducing disclosures. The self-expectation on organizational legitimacy also affects how CSR reporting is used in legitimation. The employee-related disclosure analysed is closer to symbolic legitimation than substantive legitimation.Originality/valueThis study contributes to reporting practice by showing that employee-related disclosure is largely vacuous and to a greater extent is used as symbolic legitimation. The quality of disclosure requires significant improvement. This study contributes to the literature by using the legitimacy theory to interpret employee-related disclosure in China, addressing inadequate research efforts in the context of social and human rights dimensions of CSR reporting.",
author = "Li Zhongtian and Shamima Haque and Larelle Chapple",
note = "The authors acknowledge comments from participants at the Asia Pacific Interdisciplinary Research in Accounting Conference, Melbourne, July 2016.",
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T2 - Media exposure in the electronic manufacturing services industry in China

AU - Zhongtian, Li

AU - Haque, Shamima

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N1 - The authors acknowledge comments from participants at the Asia Pacific Interdisciplinary Research in Accounting Conference, Melbourne, July 2016.

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N2 - PurposeThis paper aims to examine changes of non-financial voluntary reporting practices over time in response to episodes of employee-related distress. It investigates employee-related disclosures by the four largest electronic manufacturing services firms in China between 2008 and 2013 during a series of employment-related incidents, to investigate how the firms re-legitimate their reputation in response to the media coverage on those incidents.Design/methodology/approachA series of employee-related incidents that occurred in 2010-2012 is selected as the focus of this study, with total coverage of employee-related disclosures between 2008 and 2013. These incidents are directly linked to three of the four sample companies: Foxconn, Pegatron and Compal Electronics. Employee-related disclosures in corporate social responsibility (CSR) stand-alone reports are coded by a set of specifically designed instructions, and newspaper articles about employee-related incidents are coded for sentiment. Results are interpreted through two theoretical lenses: the media agenda setting theory and the legitimacy theory.FindingsNewspapers reported the employee-related incidents in a way detrimental to the legitimacy of firms that directly involved in the selected industry. In the process of legitimation, firms switch between disclosing more employee-related information and reducing disclosures. The self-expectation on organizational legitimacy also affects how CSR reporting is used in legitimation. The employee-related disclosure analysed is closer to symbolic legitimation than substantive legitimation.Originality/valueThis study contributes to reporting practice by showing that employee-related disclosure is largely vacuous and to a greater extent is used as symbolic legitimation. The quality of disclosure requires significant improvement. This study contributes to the literature by using the legitimacy theory to interpret employee-related disclosure in China, addressing inadequate research efforts in the context of social and human rights dimensions of CSR reporting.

AB - PurposeThis paper aims to examine changes of non-financial voluntary reporting practices over time in response to episodes of employee-related distress. It investigates employee-related disclosures by the four largest electronic manufacturing services firms in China between 2008 and 2013 during a series of employment-related incidents, to investigate how the firms re-legitimate their reputation in response to the media coverage on those incidents.Design/methodology/approachA series of employee-related incidents that occurred in 2010-2012 is selected as the focus of this study, with total coverage of employee-related disclosures between 2008 and 2013. These incidents are directly linked to three of the four sample companies: Foxconn, Pegatron and Compal Electronics. Employee-related disclosures in corporate social responsibility (CSR) stand-alone reports are coded by a set of specifically designed instructions, and newspaper articles about employee-related incidents are coded for sentiment. Results are interpreted through two theoretical lenses: the media agenda setting theory and the legitimacy theory.FindingsNewspapers reported the employee-related incidents in a way detrimental to the legitimacy of firms that directly involved in the selected industry. In the process of legitimation, firms switch between disclosing more employee-related information and reducing disclosures. The self-expectation on organizational legitimacy also affects how CSR reporting is used in legitimation. The employee-related disclosure analysed is closer to symbolic legitimation than substantive legitimation.Originality/valueThis study contributes to reporting practice by showing that employee-related disclosure is largely vacuous and to a greater extent is used as symbolic legitimation. The quality of disclosure requires significant improvement. This study contributes to the literature by using the legitimacy theory to interpret employee-related disclosure in China, addressing inadequate research efforts in the context of social and human rights dimensions of CSR reporting.

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