Textual Analysis to Empirically Assess the Impact of Economic Crises on Stakeholder Orientation

Abstract

This study uses textual analysis of annual reports to evaluate the presence of stakeholder theory in times of economic crises. Although the literature on stakeholder tendency in times of crises is scarce and predominantly focused on U.S. and Austrian data, it suggests that adopting the principles of a stakeholder model may lead companies to a more successful crises management outcome. Academic contributions to German-listed companies utilizing textual analysis are limited. Hence, we start by proposing a qualitative textual approach to analyze annual reports of German-listed companies in the DAX from the period 2000 to 2020 to extract relevant information on the tendency to apply shareholder- or stakeholder-theory-related aspects in times of economic crises such as the Global Financial Crises and more recently the COVID-19 crises. We examine our gathered word extractions with a well-found methodological approach based on a comprehensive literature review and perform a logit regression to test formulated hypotheses. By analyzing word frequencies in annual reports that refer to either shareholders or stakeholders we aim to assess the importance that the management of listed companies attaches to each management approach in times of crises. Based on existing literature, we formulate the central research question of whether the word frequency of shareholder-related words in years of economic crises increases compared to years without economic crises. In line with Asel, Posch, and Speckbacher (2011), our research reconfirms that there is no tendency or conflict of both shareholder and stakeholder management in times of economic crises. In a nutshell, our empirical results indicate that there is no statistically significant increase in word frequencies of either shareholder- or stakeholder-related words in years of economic crises present. Finally, we conclude by challenging the effectiveness of either the shareholder or stakeholder orientation in economic crises-like situations and encouraging further empirical research contributions on this field, and utilizing the proposed textual analysis for other essential research questions, such as the presence of AI-related aspects amongst German-listed companies or indications about price increases in times of high inflation.