The Role of Users’ Engagement in Shaping Financial Reporting: Should Activists Target Accounting More?
Accounting and Business Research, Forthcoming
52 Pages Posted: 25 Mar 2021 Last revised: 27 Apr 2021
Date Written: March 23, 2021
We define accounting engagement as stakeholders’ actions taken with the intention of influencing corporate reporting. Using this definition, we review the literature on such activism and discuss avenues for research. The evidence reviewed suggests accounting engagement is rare. We reflect on the reasons of this, given evidence on increasing overt engagement on other corporate issues, such as managerial compensation and governance, social, and environmental responsibility. Both information production and information acquisition costs have decreased over time, raising further questions about why engagement has not increased. We consider potential reasons linked to concerns over whether financial reporting meets users’ information needs, particularly, given the emergence of new users and the role of new technologies in the diffusion and processing of information. These concerns have accompanied claims of increasing complexity of financial accounting and the threat of information overload.
Keywords: Accounting engagement, activism, information production costs, information acquisitions costs; users’ information needs, information complexity, information overload
JEL Classification: G23, G32, G34, M41
Suggested Citation: Suggested Citation