Internal Information Quality and Its Relationship with Bankruptcy, Selective Disclosure, and Misconduct

Alsolmi, Amjad Flaih R (2026) Internal Information Quality and Its Relationship with Bankruptcy, Selective Disclosure, and Misconduct. Doctoral thesis, University of East Anglia.

PDF Restricted to Repository staff only until 28 February 2029. Request a copy

Abstract

This thesis examines how the quality of a firm’s internal information environment is associated with three critical organizational domains: bankruptcy, selective disclosure, and corporate misconduct. In corporate settings marked by regulatory scrutiny and stakeholder pressure, managerial decision-making depends on timely, accurate, and relevant internal information. Drawing on decision theory and organizational learning, the thesis presents three empirical studies using large-scale archival data from established U.S. databases. Collectively, the studies analyze financial distress and bankruptcy resolution, selective environmental disclosure, and environmental and social misconduct.

The thesis develops and tests the central argument that high-quality internal information environments reduce the likelihood of organizational failure and misconduct, enhance the credibility of voluntary disclosure, and enable firms to respond more effectively to financial and reputational shocks.

The first study examines the association between internal information quality (IIQ) and firms’ responses to financial distress. Using a sample of 29,441 bankrupt and non-bankrupt U.S. firms from 2003 to 2021, the analysis investigates whether IIQ affects (1) the likelihood of bankruptcy filing, (2) the probability of successful emergence from Chapter 11 reorganization, and (3) the duration of bankruptcy proceedings. The findings indicate that firms with lower IIQ are significantly more likely to file for bankruptcy. Conditional on filing, firms with higher IIQ are more likely to emerge successfully and experience shorter Chapter 11 durations. Robustness tests, including alternative distress proxies and matching techniques, support these findings. Overall, the findings suggest that IIQ is a crucial determinant of organizational resilience under severe financial stress.

The second study explores the relationship between IIQ and firms’ selective environmental disclosure practices, as well as the moderating roles of market competition and industry characteristics. Using firm-level data from 2004 to 2021, the results show that higher IIQ is associated with less selective environmental disclosure, suggesting that firms with stronger internal information environments exhibit greater transparency. However, this negative association is attenuated in highly competitive markets, indicating that competitive pressures may weaken the negative association between IIQ and selective disclosure. Additional analyses reveal that the association is particularly pronounced in controversial industries, whereas no significant moderating effect is observed for environmentally sensitive industries. The results are robust to plausibly exogenous shocks, including the adoption of ASC 842, and to multiple alternative specifications.

The third study investigates how IIQ relates to the likelihood and severity of corporate environmental and social violations and whether firms adjust their internal information environments following misconduct. Drawing on organizational learning theory, the study analyzes data from 2004 to 2021 and employs fixed-effects regressions, event-study analyses, and staggered difference-in-differences designs. The findings indicate that higher IIQ significantly reduces both the likelihood and severity of environmental and social violations. Moreover, firms tend to improve IIQ following environmental violations, consistent with adaptive learning. In contrast, social violations are associated with subsequent declines in IIQ, highlighting heterogeneity in organizational learning across misconduct types. Penalty severity plays only a modest moderating role.

Taken together, the three studies provide a unified framework that conceptualizes IIQ as a foundational element of effective managerial decision-making. The thesis demonstrates that IIQ not only enhances routine operational and strategic decisions but also plays a decisive role in shaping how firms withstand financial distress, communicate environmental performance, and prevent or respond to misconduct. By integrating evidence across bankruptcy, sustainability reporting, and corporate misconduct, this research advances the literature on accounting, corporate governance, and decision theory and offers important practical insights for managers, boards, investors, creditors, and regulators seeking to strengthen organizational resilience and long-term viability.

Item Type:	Thesis (Doctoral)
Faculty \ School:	Faculty of Social Sciences > Norwich Business School
Depositing User:	Chris White
Date Deposited:	22 Jun 2026 10:14
Last Modified:	22 Jun 2026 10:14
URI:	https://ueaeprints.uea.ac.uk/id/eprint/103461
DOI:

Actions (login required)

View Item