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Financial distress and corporate transparency/opacity: The role of firm visibility

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  • Kuzey, Cemil
  • Uyar, Ali
  • Wasiuzzaman, Shaista
  • Karaman, Abdullah S.
  • Inwinkl, Petra

Abstract

This study investigated whether financially distressed firms become more transparent or more opaque and whether firm visibility plays a significant role in firms’ engagement with sustainability reporting practices. We drew on a global sample of records from between 2005 and 2019 (including 10 sectors). The findings showed that financially distressed firms avoid publishing sustainability reports, obtaining independent assurance for these reports, and crafting the reports according to the GRI framework. Furthermore, we found that financially distressed firms with higher visibility are more likely to issue sustainability reports, follow GRI guidelines in crafting these reports, and have the reports assured by an external verifier.

Suggested Citation

  • Kuzey, Cemil & Uyar, Ali & Wasiuzzaman, Shaista & Karaman, Abdullah S. & Inwinkl, Petra, 2023. "Financial distress and corporate transparency/opacity: The role of firm visibility," International Review of Economics & Finance, Elsevier, vol. 88(C), pages 766-798.
    • Handle: RePEc:eee:reveco:v:88:y:2023:i:c:p:766-798
    DOI: 10.1016/j.iref.2023.07.019
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    References listed on IDEAS

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    1. Chan, Chia-Ying & Chou, De-Wai & Lo, Huai-Chun, 2017. "Do financial constraints matter when firms engage in CSR?," The North American Journal of Economics and Finance, Elsevier, vol. 39(C), pages 241-259.
    2. Caroline Flammer & Aleksandra Kacperczyk, 2016. "The Impact of Stakeholder Orientation on Innovation: Evidence from a Natural Experiment," Management Science, INFORMS, vol. 62(7), pages 1982-2001, July.
    3. Min Liu & Weijie Lu, 2021. "Corporate social responsibility, firm performance, and firm risk: the role of firm reputation," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 28(5), pages 525-545, September.
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