Blame Attribution and Disclosure Propensity

The Accounting Review, forthcoming

60 Pages Posted: 25 Jul 2018 Last revised: 19 Oct 2020

See all articles by Jason D. Schloetzer

Jason D. Schloetzer

Georgetown University - McDonough School of Business

Ayung Tseng

Georgetown University - Department of Accounting and Business Law; Indiana University

Teri Lombardi Yohn

Emory University Goizueta Business School

Yeo Sang (Johnny) Yoon

University of Minnesota, Carlson School of Management

Date Written: August 15, 2020

Abstract

We hypothesize that firms are less likely to disclose information regarding a material negative economic event for which the firm is likely to be blamed than for a negative economic event for which the firm is likely to be perceived as blameless. We identify 383 material negative economic events (casualty accidents, oil spills, catastrophes, investor class action lawsuits) and find thatfirms are approximately four times less likely to disclose information following a negative blamed event than for a negative blameless event. Consistent with the assertion underlying our hypothesisthat disclosure of a blamed event increases the firm’s reputation and litigation risks, we find that firms that disclose after a blamed event, but not a blameless event, experience greater reputation and litigation costs than firms that do not disclose. We also find that blame attribution provides incremental information over manager career concerns in the disclosure decision. These findings suggest that an event-specific factor—blame attribution—affects firms’ propensity to provide disclosures about material negative economic events.

Keywords: economic event, voluntary disclosure, blame, litigation risk, firm reputation

JEL Classification: K22, M41

Suggested Citation

Schloetzer, Jason D. and Tseng, Ayung and Yohn, Teri Lombardi and Yoon, Yeo Sang (Johnny), Blame Attribution and Disclosure Propensity (August 15, 2020). The Accounting Review, forthcoming, Available at SSRN: https://ssrn.com/abstract=3212756 or http://dx.doi.org/10.2139/ssrn.3212756

Jason D. Schloetzer

Georgetown University - McDonough School of Business ( email )

3700 O Street, NW
Washington, DC 20057
United States
202-687-2672 (Phone)

HOME PAGE: http://explore.georgetown.edu/people/jds99/?PageTemplateID=319

Ayung Tseng

Georgetown University - Department of Accounting and Business Law ( email )

McDonough School of Business
Washington, DC 20057
United States

Indiana University ( email )

1309 E. 10th Street
Bloomington, IN 47405
United States

Teri Lombardi Yohn (Contact Author)

Emory University Goizueta Business School ( email )

201 Dowman Drive
Atlanta, GA 30322
United States

Yeo Sang (Johnny) Yoon

University of Minnesota, Carlson School of Management ( email )

Minneapolis, MN
United States

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