Date of Award

2009

Degree Type

Thesis

Degree Name

Bachelor of Business Honours

Faculty

Faculty of Business and Law

First Advisor

Dr Theo Christopher

Abstract

The objective of this study is to utilise both legitimacy theory and reputation risk management theory to examine the impact of the Beijing Olympic Sponsorship Program on annual report social disclosures by local sponsors. Specially, this study attempts to test whether local sponsors increase annual report social disclosure in responses to their sponsorship participation and whether the increases can be explained by other companies operating in the same industry group. This study also compares and contrasts legitimacy theory with reputation risk management theory, and discusses the applicable power of legitimacy theory and reputation risk management theory in positive events/issues. The annual report disclosures are reviewed for both sponsors and non-sponsors in order to make before and after comparisons. Comparisons are also made between sponsors and non-sponsors in terms of their social disclosure and event-related disclosure. The results indicate that first, sponsors disclosed more social and event-related information in their annual reports after they participated in the sponsorship program, while this was not the case for non-sponsors; second, sponsors disclosed more event-related disclosure than non-sponsors but not for the overall social disclosure. This study also found that the event-related disclosure was significantly correlated with levels of sponsorship while the total amount of social disclosure was correlated with firm size. These results suggest that the annual report could be used as a self-presentational device for managers to protect and enhance corporate reputation. Reputation risk management theory does have the power in explaining certain amounts of social disclosure particularly in these positive issues, but only limited with these firms which gained reputation from the issue. These results do not challenge the dominance of legitimacy theory in corporate social disclosure area, but argues that reputation risk management theory could provide several useful insights and be used as a supplement of legitimacy theory.

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