Does reaction to controversy in corporate narratives depend on its significance for various stakeholders?
Does reaction to controversy in corporate narratives depend on its significance for various stakeholders?

Summary/Abstract: Purpose– The study aims to determine whether a relationship exists between the potential significance ofcorporate controversies for stakeholders and how organisations respond to them in their annual andsustainability reports.Design/methodology/approach– This paper employs content analysis on annual and sustainabilityreports of 48 listed companies from the Refinitiv database. The logit regression was used to estimate the model.Findings– The study revealed that the main factors increasing the probability of a controversial issue beingaddressed in a corporate report are the controversy’s potential significance, companies’ financial performanceand lawsuits.Research limitations/implications– Our study has three major limitations. These are a relatively smallsample of companies and reports, focusing on disclosures made in corporate reports and omitting otherchannels of communication, for example, social media, and a certain amount of subjectivity in the process ofcoding information.Social implications– Former studies show that corporations face a serious risk of their hypocriticalstrategies becoming too evident for stakeholder groups. Our findings suggest that the risk is alreadymaterialising and may undermine the idea of CSR and sustainability reporting.Originality/value– Our research focuses on high-profile adverse incidents widely reported in the media, theomission of which from corporate reports seems to constitute a particular case of organised hypocrite. It alsodemonstrates that companies use an impression management strategy to defuse adverse publicity and thatmajor controversies cause minor ones to be omitted from their reports.

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