Stakeholder orientation and accounting conservatism: Evidence from State-Level constituency statutes

IF 3.3 3区管理学 Q1 BUSINESS, FINANCE

Journal of Accounting and Public Policy Pub Date : 2025-03-28 DOI:10.1016/j.jaccpubpol.2025.107295

Suresh Radhakrishnan , Ke Wang , Zheng Wang

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引用次数: 0

Abstract

We find that the staggered adoption of state-level constituency statutes leads to a significant decrease in accounting conservatism. Constituency statutes allow directors to consider stakeholder interests when making business decisions, thereby increasing firms’ stakeholder orientation. As firms shift attention to stakeholder interests, stakeholders become less concerned about shareholder expropriation and thus demand less conservatism. Cross-sectional analyses show stronger effects for firms with greater agency conflict between shareholders and nonfinancial stakeholders (i.e., customers, suppliers, and employees) and for firms where shareholders and debtholders have lower demand for conservatism. In additional analyses, we find that the adoption of constituency statutes does allow firms to implement corporate policies that are more friendly to their employees, customers, and suppliers. We also show that the effect of constituency statutes on conservatism still holds when the statutes only cover nonfinancial stakeholders (but not debtholders).

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来源期刊

Journal of Accounting and Public Policy Multiple-

CiteScore

4.80

自引率

2.80%

发文量

期刊介绍： The Journal of Accounting and Public Policy publishes research papers focusing on the intersection between accounting and public policy. Preference is given to papers illuminating through theoretical or empirical analysis, the effects of accounting on public policy and vice-versa. Subjects treated in this journal include the interface of accounting with economics, political science, sociology, or law. The Journal includes a section entitled Accounting Letters. This section publishes short research articles that should not exceed approximately 3,000 words. The objective of this section is to facilitate the rapid dissemination of important accounting research. Accordingly, articles submitted to this section will be reviewed within fours weeks of receipt, revisions will be limited to one, and publication will occur within four months of acceptance.