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The Impact of External Monitoring and Public Reporting on Business Performance in a Global Manufacturing IndustryCollege of Business Administration, Kansas State University, jkatz{at}ksu.edu
College of Business Administration, Kansas State University
Department of Fashion and Apparel Studies, University of Delaware
College of Applied Human Sciences, Colorado State University This study examines the importance of external monitoring and public reporting on the performance of firms in the global apparel industry. By focusing on the relevance of company reputation in the global community, the authors examine financial performance and stock market reaction to the release of information describing the manufacturing practices of firms made available by a third-party monitor. Using agency theory as a predictive framework, industry-wide changes in market measures of company risk as a result of third-party monitoring are found, suggesting that society values such external reports. The authors’ findings are important to business and society because they bridge the gap in knowledge about how voluntary compliance programs are supplemented by external monitoring and reporting for firms operating in the global environment. This work suggests that external monitoring is valuable to business and society by reducing information asymmetry between the two groups and encouraging accurate assessment of the risks associated with global operations.
Key Words: external monitoring • corporate social responsibility • business performance • global manufacturing
This version was published on December
1, 2009 Business & Society, Vol. 48, No. 4,
489-510 (2009) |
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