Variables in the regression model
| Variable’s name | Variable’s type | Description | Measurement | Expected sign | Source |
|---|---|---|---|---|---|
| Disclosure strategy | Dependent | Disclosure strategies of firms involved in controversies | Binary variable: 1 for an information strategy, and 0 for impression management | Merkl-Davies and Brennan (2007) and Merkl-Davies et al. (2011) | |
| Significance of a controversy | Independent | The number of stakeholder groups considering it important weighted by the involved company’s sensitivity to stakeholder pressure | SSi= Ii*INi + Ci*CUi + COM1i*ECi + COM2i + Gi + Ei where SSi – the significance of a controversy for a company Ii – the significance of a controversy for investors INi – a company’s sensitivity to shareholder pressure (a dummy variable; yes – 2; no – 1) Ci – the significance of a controversy for customers CUi – industries under pressure from customers (yes – 2, no – 1) COM1i – the significance of an environmental controversy for a local community ECi – an environmentally sensitive industry (highly sensitive – 2, otherwise – 1) COM2i – the significance of a controversy relating to human life or health for a local community Gi – the significance of a controversy for the government Ei-the significance of a controversy for employees | + | Fernandez-Feijo et al. (2014) |
| Financial performance (ROA | Independent | The sign of return on assets in the year when the controversy occurred | Binary variable: 1 when ROA is negative, and 0 when ROA is positive | + | La Torre et al. (2021) and Lin et al. (2020) |
| Litigation (L) | Independent | The legal consequences of controversies occurred | Binary variable: 1 when as a result of the controversy, lawsuits against the company were filed. 1 when any lawsuit started, and 0 otherwise | + | Mure et al. (2021) |
| Variable’s name | Variable’s type | Description | Measurement | Expected sign | Source |
|---|---|---|---|---|---|
| Disclosure strategy | Dependent | Disclosure strategies of firms involved in controversies | Binary variable: 1 for an information strategy, and 0 for impression management | ||
| Significance of a controversy | Independent | The number of stakeholder groups considering it important weighted by the involved company’s sensitivity to stakeholder pressure | SSi= Ii*INi + Ci*CUi + COM1i*ECi + COM2i + Gi + Ei | + | |
| Financial performance (ROA | Independent | The sign of return on assets in the year when the controversy occurred | Binary variable: 1 when ROA is negative, and 0 when ROA is positive | + | |
| Litigation (L) | Independent | The legal consequences of controversies occurred | Binary variable: 1 when as a result of the controversy, lawsuits against the company were filed. 1 when any lawsuit started, and 0 otherwise | + |
Source(s): Own elaboration
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