Thorsten Sellhorn, Professor for Business Administration at LMU Munich, is involved in two projects of the TRR 266. In Project A07, he and Katharina Hombach investigate how decision makers cope with ambiguity about optimal reporting policies. In B04, he explores the impact of transparency regulation on investment and product markets as well as firms’ own business decisions, together with Joachim Gassen and Jens Müller. He shares his views on his research below.
Accounting: It’s always about transparency
Accounting is actually always about transparency. It’s all about using numbers to provide a true and fair view of a company and its complex business transactions. My perspective on accounting as well as my decision to pursue an academic career was strongly influenced by my doctoral supervisor, Bernhard Pellens. He knows how to make accounting interesting and how to inspire enthusiasm for this profession. Accounting is not a dry technicality but the language of business. I am quite happy I chose this path. Accounting opens up a multi-faceted world that ranges from highly complex theories to applied empirical research. And it always offers the opportunity to deal with new exciting topics – like corporate responsibility or digital transformation.
Accounting opens up a multi-faceted world that ranges from highly complex theories to applied empirical research.
Investigating the determinants and effects of transparency
Within the TRR 266, I am involved in two projects. Whereas one focuses on the determinants of transparency, the other investigates its effects. In A07 we want to understand how transparency comes about. Therefore, we examine the reporting decisions of firms. ‘What information do I offer? How do I present it? Which stakeholder groups do I address?’ Firms often have no obvious answers to these questions. Confronted with constant change in regulation, their business environments and stakeholders’ information needs, firms make reporting decisions under permanent uncertainty. We want to know how firms deal with this uncertainty. To find out, we are planning a comprehensive survey of firm managers and stakeholders.
In B04, we want to know what impact transparency has on firms and non-investor stakeholders, namely how disclosure requirements affect firms’ business decisions as well as product and labor markets. We already know that certain transparency requirements that regulators impose on firms lead to behavioral changes – for example regarding investment, product design, or incentive systems. But we have much to learn in terms of why this is the case. Also, whereas some of these behavioral adjustments are intended by regulators, some are unintended side effects that were not previously considered. That’s what we want to find out. We are using field data analyses to look very closely at how those decisions are made and the causal relationships behind them. We have already conducted initial pretests with regulatory authorities, and we are about to start our formal interview series.
We already know that certain transparency requirements that regulators impose on firms lead to behavioral changes – for example regarding investment, product design, or incentive systems.
Research: Providing concrete insights for action
Intensive interaction with firms and policy-makers is fundamental to our research. For relevant and significant research results we need data and insights from practice. Empirical field studies are therefore a central part of our research. At the same time, I consider it very important to get into direct contact with the regulatory players and the firms in order to have detailed discussions. With the Forum we have a great platform for this. In our interactive break-out sessions, we will have the chance to discuss key issues in detail.
The flow of information between practice and science is never a one-way street, but always a giving and taking. Not only we benefit from this exchange, but the firms and regulators also do. It is important to emphasize this to non-academics. Not all of them are aware of the impact that scientific findings can have on practice. We are confident that managers, auditors, investors, and policy-makers can derive concrete insights for action from our findings – for better corporate decisions and transparency regulations.
We are confident that managers, auditors, investors, and policy-makers can derive concrete insights for action from our findings – for better corporate decisions and transparency regulations.
TRR 266: Let’s make it happen!
The TRR 266 is a great chance for me to push research on transparency together with fascinating colleagues. Many exciting new research ideas and synergies are created through this close exchange. And of course, as a DFG-funded group of researchers, we gain more attention than we could as individual researchers. The TRR 266 is a door-opener in practice and politics. It offers us the opportunity to really make a difference. I am therefore all the more pleased about the way our research network is developing. You can literally feel it: Something is really growing together. It’s impressive to see the momentum and dynamics the TRR 266 is developing. This is of course also due to the motivational artists of our leadership team – such as Caren Sureth-Sloane and Joachim Gassen with their positive can-do attitude: Let’s make it happen!
The TRR 266 is a door-opener in practice and politics. It offers us the opportunity to really make a difference.
EAA: Networking sustainably
I am pretty aware of how crucial a broad network is for successful research. This is why my commitment to the European Accounting Association (EAA), which I have chaired since 2019, is also very important to me. At the EAA, we are especially committed to academics who do not have access to an extensive network or resources at their home institutions. In general, we want to support academics worldwide in their work by providing a platform for exchange as well as support for emerging scholars in building their academic careers. It is therefore important to me to make the association as sustainable as possible in terms of staff and finances. At the same time, environmental sustainability is close to my heart. We want to reduce our ecological footprint, which means less plastic and fewer flights. Consequently, we plan to create more virtual meeting places so that we don’t always have to cross oceans to have a proper exchange.
Future research: Thinking about sustainability and democracy
Overall, ecological sustainability has become an important topic for me. A topic that can also be integrated excellently into our research. After all, the UN sustainability goals and the Paris agreement have triggered a vast EU green agenda, with transparency regulation being an important policy instrument that needs to be examined more closely. I would be pleased if we could manage to include this topic center-stage in our TRR 266 research agenda. And two other topics are also of great social relevance: digital transformation and the role of the media for democracy. How does digitalization affect the transparency of firms? Also, could accountants and auditors leverage their skills and resource into providing certification services for the media – to help combat fake news and strengthen democracy? I feel these are interesting questions with a huge impact on society, which I would really like to see the TRR focus on.