Sense-making and sense-giving:

Reaching through the smokescreen of sustainability disclosure in the stock market

Document identifier: oai:DiVA.org:ltu-76331
Access full text here:10.1007/978-3-319-93266-8_4
Keyword: Social Sciences, Economics and Business, Business Administration, Samhällsvetenskap, Ekonomi och näringsliv, Företagsekonomi, Sustainability information Financial analysts Cognitive frames Cognitive dissonance, Sense-making, Sense-giving, Social legitimacy, Cognitive legitimacy, Accounting and Control, Redovisning och styrning
Publication year: 2019
Relevant Sustainable Development Goals (SDGs):

The SDG label(s) above have been assigned by OSDG.ai

Abstract:

Financial analysts’ role as information intermediaries between management teams and investors is vital for the efficient allocation of resources on the stock market. The increased focus on sustainability information in corporate reports has affected financial analysts in their important work of interpreting, assessing and communicating value-added information to their clients, i.e. the investors. The challenges they face relate to the ambiguous nature of sustainability information and its difference from traditional financial information. How do analysts reach through this smokescreen? How do analysts make sense of sustainability information, and how do they give sense to this information when they provide investment advices to their investors? In this chapter, these challenges are addressed from a cognitive-frame perspective. We argue that the first part of 2000s was characterized by cognitive dissonance due to both a low social legitimacy and a low cognitive legitimacy, i.e. sustainability was not yet requested by the investors to be attended to and it was regarded too ambiguous to be relevant for being considered in a valuation context. In the latter part of 2010s, we argue that there is only a partial cognitive dissonance. At this time, sustainability information is beginning to be socially legitimate and requested by investors. However, the complexity of the situation remains. This type of information is still not considered as cognitive legitimate due to the ambiguous nature, which renders difficulties for the sense-making and sense-giving processes. The findings have implications not the least in the ongoing quest of developing frameworks, standards and legislation (e.g. the EU directive (2014/EU/95)), that opt for improving the relevance, credibility and comparability of sustainability information.

Authors

Susanne Arvidsson

Lund University
Other publications >>

Jeaneth Johansson

Luleå tekniska universitet; Industriell Ekonomi; Entreprenörskap och innovation
Other publications >>

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        identifier: oai:DiVA.org:ltu-76331
        datestamp: 2021-04-19T13:09:27Z
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                version: 3.7
            recordInfo: 
                recordContentSource: ltu
                recordCreationDate: 2019-10-09
            identifier: 
                http://urn.kb.se/resolve?urn=urn:nbn:se:ltu:diva-76331
                10.1007/978-3-319-93266-8_4
                2-s2.0-85063422748
            titleInfo: 
                @attributes: 
                    lang: eng
                title: Sense-making and sense-giving:
                subTitle: Reaching through the smokescreen of sustainability disclosure in the stock market
            abstract: 
Financial analysts’ role as information intermediaries between management teams and investors is vital for the efficient allocation of resources on the stock market. The increased focus on sustainability information in corporate reports has affected financial analysts in their important work of interpreting assessing and communicating value-added information to their clients i.e. the investors. The challenges they face relate to the ambiguous nature of sustainability information and its difference from traditional financial information. How do analysts reach through this smokescreen? How do analysts make sense of sustainability information and how do they give sense to this information when they provide investment advices to their investors? In this chapter these challenges are addressed from a cognitive-frame perspective. We argue that the first part of 2000s was characterized by cognitive dissonance due to both a low social legitimacy and a low cognitive legitimacy i.e. sustainability was not yet requested by the investors to be attended to and it was regarded too ambiguous to be relevant for being considered in a valuation context. In the latter part of 2010s we argue that there is only a partial cognitive dissonance. At this time sustainability information is beginning to be socially legitimate and requested by investors. However the complexity of the situation remains. This type of information is still not considered as cognitive legitimate due to the ambiguous nature which renders difficulties for the sense-making and sense-giving processes. The findings have implications not the least in the ongoing quest of developing frameworks standards and legislation (e.g. the EU directive (2014/EU/95)) that opt for improving the relevance credibility and comparability of sustainability information.

            subject: 
                    @attributes: 
                        lang: eng
                        authority: uka.se
                    topic: 
                        Social Sciences
                        Economics and Business
                        Business Administration
                    @attributes: 
                        lang: swe
                        authority: uka.se
                    topic: 
                        Samhällsvetenskap
                        Ekonomi och näringsliv
                        Företagsekonomi
                    @attributes: 
                        lang: eng
                    topic: Sustainability information Financial analysts Cognitive frames Cognitive dissonance
                    @attributes: 
                        lang: eng
                    topic: Sense-making
                    @attributes: 
                        lang: eng
                    topic: Sense-giving
                    @attributes: 
                        lang: eng
                    topic: Social legitimacy
                    @attributes: 
                        lang: eng
                    topic: Cognitive legitimacy
                    @attributes: 
                        lang: eng
                        authority: ltu
                    topic: Accounting and Control
                    genre: Research subject
                    @attributes: 
                        lang: swe
                        authority: ltu
                    topic: Redovisning och styrning
                    genre: Research subject
            language: 
                languageTerm: eng
            genre: 
                publication/book-chapter
                ref
            note: 
                Published
                2
                

            name: 
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                        type: personal
                    namePart: 
                        Arvidsson
                        Susanne
                    role: 
                        roleTerm: aut
                    affiliation: Lund University
                    @attributes: 
                        type: personal
                        authority: ltu
                    namePart: 
                        Johansson
                        Jeaneth
                    role: 
                        roleTerm: aut
                    affiliation: 
                        Luleå tekniska universitet
                        Industriell Ekonomi
                        Entreprenörskap och innovation
                    nameIdentifier: 
                        jeaneth
                        0000-0002-3377-6177
            originInfo: 
                dateIssued: 2019
                publisher: Springer Nature
            relatedItem: 
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                    type: host
                titleInfo: 
                    title: Challenges in Managing Sustainable Business
                    subTitle: Reporting Taxation Ethics and Governance
                part: 
                    extent: 
                        start: 77
                        end: 109
                identifier: 
                    978-3-319-93266-8
                    978-3-319-93265-1
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                form: print
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