Does voluntary disclosure matter when organizations violate stakeholder trust?

Abstract

The reputations of nonprofit organizations can be damaged as a result of an organizational scandal, as demonstrated by recent examples of international nonprofit and non-governmental organizations. Common practice and findings from studies using administrative data suggest that nonprofits can reduce the negative effects of scandals by voluntarily disclosing information about the event to stakeholders. This study tests those assumptions in an experimental framework and finds that organizations’ voluntary disclosure of a scandal does not effectively mitigate negative donation intentions following the crisis.