An examination of the structure of executive compensation and corporate social responsibility: A Canadian investigation

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Accounting and Finance


One of the biggest assets of a firm is its information base. Included in this information base is a knowledge of prior errors and failures. Extant research suggests that while the propensity to share “bad news” (i.e. a prior error) is dependent on the cost of sharing, the perceived value of that cost may be culturally dependent. One area of interest that has received substantial attention in the prior literature has been cross-cultural differences in negative information sharing in general, as well as the particular context in which the individual's superior is either present or absent during the information-sharing process. Our study examines the role of the two cultural values (individualism/collectivism and to a lesser extent power distance) in explaining national differences in information sharing. By focusing on a sample from Chile and Australia, we were able to remove the regional cultural dimension of face, which has been inherent in prior studies that used Greater China as the representative of a collectivist society. Results from our quasi experiment show that when a supervisor is present during information sharing, collectivist Chilean decision-makers are more willing to share negative information with their colleagues than their counterpart and individualist Australian decision-makers. Our results also show that when a supervisor is absent, both Australian and Chilean decision-makers are willing to share more negative information but the increase in the Australian propensity is significantly greater than that of the Chileans.