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Can bad news be good? On the positive and negative effects of including moderately negative information in CSR disclosures

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  • Jahn, Johannes
  • Brühl, Rolf

Abstract

Most companies are eager to present themselves as “green,” “sustainable” or “socially responsible” by making overly positive and optimistic corporate social responsibility (CSR) disclosures. Failures, setbacks and mistakes, however, are usually withheld. This study critically examines the advantageous and disadvantageous effects of voluntarily disclosing moderately negative information. We argue that two countervailing effects exist that affect corporate trustworthiness. First, attribution theory predicts that voluntarily reporting negative information is likely to be attributed to the honesty of the company. However, second, readers may perceive the voluntary disclosure of negative information as implausible, which adversely affect trustworthiness. The study additionally investigates the effects of moderately negative information and trustworthiness on CSR perception. An experiment was conducted to test these relationships, and the results provide support for the positive and negative effects on trustworthiness. Moreover, no negative effect on CSR perception was detected.

Suggested Citation

  • Jahn, Johannes & Brühl, Rolf, 2019. "Can bad news be good? On the positive and negative effects of including moderately negative information in CSR disclosures," Journal of Business Research, Elsevier, vol. 97(C), pages 117-128.
    • Handle: RePEc:eee:jbrese:v:97:y:2019:i:c:p:117-128
    DOI: 10.1016/j.jbusres.2018.12.070
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    3. Hiroko Oe & Yasuyuki Yamaoka, 2022. "The Impact of Communicating Sustainability and Ethical Behaviour of the Cosmetic Producers: Evidence from Thailand," Sustainability, MDPI, vol. 14(2), pages 1-20, January.
    4. Ali Raza & Muhammad Farrukh & Muhammad Khalid Iqbal & Muhammad Farhan & Yihua Wu, 2021. "Corporate social responsibility and employees' voluntary pro‐environmental behavior: The role of organizational pride and employee engagement," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(3), pages 1104-1116, May.
    5. Jiří Boháček & Zdeněk Linhart & Peter Matisko & Miroslav Špaček, 2021. "Marketing Dialogue With Pressure Groups," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 69(2), pages 211-220.
    6. Mingyuan Guo & Shuyu Shen, 2019. "Managerial Shareholding and CSR: Does Internal Control Quality Matter?—Evidence from China," Sustainability, MDPI, vol. 11(15), pages 1-21, August.
    7. Aluchna, Maria & Roszkowska-Menkes, Maria & Kamiński, Bogumił & Bosek-Rak, Dominika, 2022. "Do institutional investors encourage firm to social disclosure? The stakeholder salience perspective," Journal of Business Research, Elsevier, vol. 142(C), pages 674-682.
    8. (Anna) Kim, Eunjin & Shoenberger, Heather & (Penny) Kwon, Eunseon & Ratneshwar, S., 2022. "A narrative approach for overcoming the message credibility problem in green advertising," Journal of Business Research, Elsevier, vol. 147(C), pages 449-461.
    9. Tello, Mario A., 2020. "Conceptualizing social impact: A geographic perspective," Journal of Business Research, Elsevier, vol. 119(C), pages 562-571.
    10. Guo, Chunying & Yang, Baochen & Fan, Ying, 2022. "Does mandatory CSR disclosure improve stock price informativeness? Evidence from China," Research in International Business and Finance, Elsevier, vol. 62(C).
    11. Gatti, Lucia & Pizzetti, Marta & Seele, Peter, 2021. "Green lies and their effect on intention to invest," Journal of Business Research, Elsevier, vol. 127(C), pages 228-240.

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