Do Detail and Its Verifiability Serve as Indicators of Strategy Effectiveness and as Sources of Credibility in Voluntary Qualitative Disclosure?
Journal of Accounting, Auditing and Finance
56 Pages Posted: 17 Jul 2018 Last revised: 23 May 2022
Date Written: October 5, 2019
This paper examines whether detail and its verifiability serve as indicators of strategy effectiveness and provide sources of credibility in voluntary qualitative disclosure. In an archival study, utilizing a difference-in-difference research design, we find that firms which introduce customer retention strategy disclosures with verifiable detail are more effective at retaining customers than are firms which introduce disclosures with non-verifiable detail. In contrast, we find no significant difference between the performance of firms which initiate disclosures with verifiable detail and that of firms which initiate disclosures with no detail. In an experimental study, we find that customer retention strategy disclosures which include either verifiable or non-verifiable detail are perceived to be more credible than disclosures which provide no detail. In combination, we infer it is the verifiability of detail which predicts strategy effectiveness consistent with the disclosure, despite detail invoking perceived credibility in such disclosure.
Keywords: Qualitative Disclosure, Credibility, Verifiability, Customer Retention Strategy
JEL Classification: M41, M49
Suggested Citation: Suggested Citation