Shareholder Activism and Accounting Reporting Complexity
Journal of Accounting Literature (Forthcoming)
Posted: 26 Apr 2023
Date Written: April 23, 2023
Abstract
We examine whether shareholder activism is associated with accounting reporting complexity (ARC). Using a sample of 3,377 unique firms during the 2010-2019 period, we find that firms with shareholder activism provide more complex accounting reporting. Further, both types of activism (including Concern & Dispute and Control & Discussion) are positively associated with ARC. We also find that the association between shareholder activism and ARC is more pronounced when the firms have a higher level of litigation risk and a higher proportion of institutional ownership. Collectively, our findings suggest that firms with shareholder activism may be under more pressure to disclose more accounting items, leading to more complex accounting reporting. Our study may be informative to regulators considering the costs and benefits of shareholder activism in financial reporting.
Keywords: shareholder activism, accounting reporting complexity
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