Intra-industry benchmarking of discretionary disclosure content in corporate reporting.

We investigate intra-industry imitation in discretionary financial disclosure and management commentary. Imitation of discretionary reporting content and related reporting choices may be conceived as a rational response to discretion and related ambiguity in order to meet explicit and implicit industry norms. This issue is crucial in the current debate on a principles-based versus rules-based approach in the reporting standard-setting process. Neo-institutional theory suggests that more ambiguous reporting properties can be affected by mimetic, cognitive and normative pressures to conform to institutional templates of appropriate behavior. Benchmarking of reporting features on those of other firms within the industry is a basic mechanism underlying imitation. Mimetic and cognitive imitation will be more prominent in reporting issues characterized by uncertainty about instrumentality (means-ends relationships) or about consequences of reporting choices, whereas for other issues normative pressures (e.g., through auditors and external stakeholders) will prevail. We will address the following research questions: (1) What is the extent of intra-industry benchmarking in specific discretionary reporting choices and which imitation mechanisms drive reporting conformity, (2) What is the impact of professional intermediaries on imitation-driven reporting, (3) Which firm-specific factors affect the extent of benchmarked reporting, and (4) Whether and to what extent self-serving consequences of industrybased imitation in external reporting can be observed.

Keywords:ACCOUNTING, CORPORATE GOVERNANCE, ORGANIZATION THEORY, STRATEGIC MANAGEMENT

Disciplines:Applied economics, Economic history, Macroeconomics and monetary economics, Microeconomics, Tourism

Project type:Collaboration project