Appeasing Stockholders at the Expense of Stakeholders: Do Contingencies Matter?

Citation

Uyar A, Kuzey C, Al-Shaer H & Karaman A (2025) Appeasing Stockholders at the Expense of Stakeholders: Do Contingencies Matter?. International Journal of Finance and Economics. https://doi.org/10.1002/ijfe.70008

Abstract
In this study, we investigate whether dividend growth is associated with both sustainability reporting and assurance. In doing so, we aim to highlight whether appeasing stockholders more may damage stakeholder communication or not. Besides, we explore whether firm growth opportunity, free cash flow and firm risk moderate between dividend growth and sustainability reporting and assurance. We hope to shed light on firm strategies balancing the stockholders' and stakeholders' interests concurrently. We fetched the data for the period between 2002 and 2019 and ran country-industry-year fixed-effects logistic regression. The findings indicate that dividend growth diminishes the likelihood of disseminating a sustainability report and assuring the sustainability report; however, this significant link is validated in the recent period (i.e., 2011–2019) rather than the earlier period (i.e., 2002–2010). Furthermore, while firms paying greater dividends with higher growth opportunities avoid assurance practice only, risky firms avoid both sustainability reporting and report assurance. Contrary to expectations, free cash flow does not significantly influence sustainability reporting and assurance practices of the firms paying greater dividends relative to the prior period. However, further analyses revealed a very significant difference between Anglo-Saxon versus non-Anglo-Saxon countries.

Keywords
assurance; cash flow; dividend growth; firm growth; firm risk; sustainability report

Journal
International Journal of Finance and Economics