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 (Forthcoming)

56 Pages Posted: 17 Jul 2018 Last revised: 9 Oct 2019

See all articles by James N. Cannon

James N. Cannon

Utah State University, School of Accountancy; Iowa State University

Christine A. Denison

Iowa State University

Olena V. Watanabe

Iowa State University - Debbie and Jerry Ivy College of Business

Date Written: October 5, 2019

Abstract

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

Cannon, James N. and Denison, Christine A. and Watanabe, Olena V., Do Detail and Its Verifiability Serve as Indicators of Strategy Effectiveness and as Sources of Credibility in Voluntary Qualitative Disclosure? (October 5, 2019). Journal of Accounting, Auditing and Finance (Forthcoming). Available at SSRN: https://ssrn.com/abstract=3203169 or http://dx.doi.org/10.2139/ssrn.3203169

James N. Cannon

Utah State University, School of Accountancy ( email )

3500 Old Main Hill
Logan, UT 84322-3500
United States
801-927-7718 (Phone)

Iowa State University ( email )

Ames, IA 50011-2063
United States
801-927-7718 (Phone)

Christine A. Denison

Iowa State University ( email )

Ames, IA 50011-2063
United States

Olena V. Watanabe (Contact Author)

Iowa State University - Debbie and Jerry Ivy College of Business ( email )

613 Wallace Road
Ames, IA 50011-2063
United States

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