The Tone from Above: The Effect of Communicating a Supportive Regulatory Strategy on Reporting Quality

41 Pages Posted: 22 Dec 2017

See all articles by Sanne R. van Duin

Sanne R. van Duin

VU University Amsterdam

Henri C. Dekker

Vrije Universiteit Amsterdam

J. Wielhouwer

VU University Amsterdam

Juan Mendoza

VU University Amsterdam

Date Written: September 29, 2017

Abstract

As part of their regulatory strategy, authorities may request firms to periodically submit mandatory self-assessments. The effectiveness of such strategies depends on the quality of the information that firms provide. We conduct a field experiment to assess how official communications reflecting a supportive regulatory strategy influence firms’ reporting quality. In collaboration with the Authority for the Financial Markets in the Netherlands, we manipulate the content of official letters that instruct financial intermediaries to submit a mandatory self-assessment. As part of the Registered Report Process, we submitted our hypotheses, experimental procedure, and planned statistical analyses before data collection. We expected an overall positive effect of a high support letter on reporting quality, which is weakened by firm size, enhanced by long-term orientation and reversed by (becomes negative for) short-term orientation. The planned analyses reveal a negative effect except for long-term oriented firms, providing no support for the average expected effect nor for moderation by firm size, but supporting the moderating influence of time horizon.

Keywords: reporting quality, responsive regulation, support, time horizon

JEL Classification: G28, M48, K42

Suggested Citation

Duin, Sanne and Dekker, Henri C. and Wielhouwer, Jacco L. and Mendoza, Juan, The Tone from Above: The Effect of Communicating a Supportive Regulatory Strategy on Reporting Quality (September 29, 2017). Available at SSRN: https://ssrn.com/abstract=3092125 or http://dx.doi.org/10.2139/ssrn.3092125

Sanne Duin

VU University Amsterdam ( email )

De Boelelaan 1105
Amsterdam, ND North Holland 1081 HV
Netherlands

Henri C. Dekker

Vrije Universiteit Amsterdam ( email )

De Boelelaan 1105
Amsterdam, 1081 HV
Netherlands

Jacco L. Wielhouwer (Contact Author)

VU University Amsterdam ( email )

De Boelelaan 1105
Amsterdam, 1081HV
Netherlands

Juan Mendoza

VU University Amsterdam ( email )

De Boelelaan 1105
Amsterdam, 1081HV
Netherlands

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