Legitimising corporate reputation in times of employee distress through disclosure: media exposure in the electronic manufacturing services industry in China

Zhongtian Li, Shamima Haque, Ellie (Larelle) Chapple

Research output: Contribution to journalArticlepeer-review

9 Citations (Scopus)

Abstract

Purpose: This paper aims to examine changes of non-financial voluntary reporting practices over time in response to episodes of employee-related distress. It investigates employee-related disclosures by the four largest electronic manufacturing services firms in China between 2008 and 2013 during a series of employment-related incidents, to investigate how the firms re-legitimate their reputation in response to the media coverage on those incidents. Design/methodology/approach: A series of employee-related incidents that occurred in 2010-2012 is selected as the focus of this study, with total coverage of employee-related disclosures between 2008 and 2013. These incidents are directly linked to three of the four sample companies: Foxconn, Pegatron and Compal Electronics. Employee-related disclosures in corporate social responsibility (CSR) stand-alone reports are coded by a set of specifically designed instructions, and newspaper articles about employee-related incidents are coded for sentiment. Results are interpreted through two theoretical lenses: the media agenda setting theory and the legitimacy theory. Findings: Newspapers reported the employee-related incidents in a way detrimental to the legitimacy of firms that directly involved in the selected industry. In the process of legitimation, firms switch between disclosing more employee-related information and reducing disclosures. The self-expectation on organizational legitimacy also affects how CSR reporting is used in legitimation. The employee-related disclosure analysed is closer to symbolic legitimation than substantive legitimation. Originality/value: This study contributes to reporting practice by showing that employee-related disclosure is largely vacuous and to a greater extent is used as symbolic legitimation. The quality of disclosure requires significant improvement. This study contributes to the literature by using the legitimacy theory to interpret employee-related disclosure in China, addressing inadequate research efforts in the context of social and human rights dimensions of CSR reporting.

Original languageEnglish
Pages (from-to)22-45
Number of pages24
JournalAccounting Research Journal
Volume31
Issue number1
Early online date8 Mar 2018
DOIs
Publication statusPublished - 2018

Keywords

  • China
  • Corporate social responsibility
  • Employee-related disclosure
  • GRI
  • Human rights

ASJC Scopus subject areas

  • Accounting
  • Finance

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