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To Reveal or Not to Reveal? The Influence of Cultural Secrecy on Discretionary Disclosure Decisions

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  • Max Göttsche

    (Catholic University of Eichstätt-Ingolstadt, Auf der Schanz 49, D-85049 Ingolstadt, Germany)

  • Stephan Küster

    (Catholic University of Eichstätt-Ingolstadt, Auf der Schanz 49, D-85049 Ingolstadt, Germany)

  • Tobias Steindl

    (Catholic University of Eichstätt-Ingolstadt, Auf der Schanz 49, D-85049 Ingolstadt, Germany)

Abstract

Prior studies on the relationship between culture and discretionary disclosure fail to account for concurrent managerial incentives to reveal private information to the capital market. Our study extends the literature by investigating whether these managerial incentives offset the cultural influence on managers’ discretionary disclosure decisions. To this end, we exploit a setting in which managers have the discretion to influence both the quantity and quality of disclosure and can thereby either conceal or reveal private information. For a sample of European firms, we find that despite incentives to reveal private information, managers’ culturally determined preference for secrecy leads them to provide a low quantity as well as a lower quality of disclosure. Our results are robust to several sensitivity checks and demonstrate the relative importance of cultural influence on discretionary disclosure decisions.

Suggested Citation

  • Max Göttsche & Stephan Küster & Tobias Steindl, 2020. "To Reveal or Not to Reveal? The Influence of Cultural Secrecy on Discretionary Disclosure Decisions," The International Journal of Accounting (TIJA), World Scientific Publishing Co. Pte. Ltd., vol. 55(03), pages 1-47, September.
    • Handle: RePEc:wsi:tijaxx:v:55:y:2020:i:03:n:s1094406020500122
    DOI: 10.1142/S1094406020500122
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    Cited by:

    1. Hüseyin Temiz & Merve Acar, 2023. "Board gender diversity and corporate social responsibility (CSR) disclosure in different disclosure environments," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(5), pages 2247-2264, September.

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