Do Corporate Site Visits Constrain Real Earnings Management?

This study investigates the relationship between corporate site visits (CSVs) and firms’ real earnings management. Using a unique dataset of site visits to Chinese firms listed on the Shenzhen Stock Exchange from 2009 to 2016, we find that such visits are negatively associated with firms’ real earnings management. The results are robust to using alternative CSV measures, controlling for alternative communication channels, and using the propensity score matching method. In cross-sectional analyses, we find that the negative association between site visits and real earnings management is stronger for more complex firms and firms with greater information asymmetry. In addition, we find that CSVs are negatively associated with both management and corporate misconduct but not with accrual-based earnings management or restatements.

Tone at the Bottom: Measuring Corporate Misconduct Risk from the Text of Employee Reviews

This paper examines whether information extracted via text-based statistical methods applied to employee reviews left on the website Glassdoor.com can be used to develop indicators of corporate misconduct risk. We argue that inside information on the incidence of misconduct as well as the control environments and broader organizational cultures that contribute to its occurrence are likely to be widespread among employees and to be reflected in the text of these reviews. Our results show that information extracted from such text can be used to develop measures with useful properties for measuring misconduct risk. Specifically, the measures we develop clearly discriminate between high- and low-misconduct-risk firms and improve out-of-sample predictions of realized misconduct risk above and beyond other readily observable characteristics, such as Glassdoor firm ratings, firm size, performance, industry risk, violation history, and press coverage. We provide further evidence on the efficacy of our text-based measures of misconduct risk by showing that they are associated with future employee whistleblower complaints even after controlling for these same observable characteristics. This paper was accepted by Brian Bushee, accounting.

Through the Smokescreen of the Dieselgate Disclosure: Neutralizing the Impacts of a Major Sustainability Scandal

This article analyzes the main neutralization techniques used in car manufacturers’ sustainability reports to disclose on the Dieselgate scandal. We conduct a conventional qualitative content analysis of 72 sustainability reports, covering the period 2013-2017, from 15 car manufacturers that were accused of unethical behaviors related to the measurement of diesel vehicle pollutant emissions. We then present a framework based on four configurations of neutralization techniques, namely, “head in the sand,” “self-proclaimed green leadership,” “wait and see,” and “start of a new era.” We describe that the manufacturers used heterogeneous neutralization techniques. Furthermore, the sustainability reports analyzed are relatively opaque and disconnected from the accusations made against the companies, which are widely reported by external sources. This article contributes to the emerging literature on the defensive impression management practices used to rationalize corporate misconduct in this area.