Employee Voice through Open-Book Accounting: The Benefits of Informational Transparency

Abstract

This paper explores the concept of open-book accounting. It illustrates the benefits of open-book reporting policies in terms of their potential ability to correct informational asymmetries, and it sets out some ideas for a future research agenda centred around the concept. The discussion is grounded in large part in the experiences of employee-owned businesses (EOBs) because such organisations are at the forefront of informational transparency innovations in social accounting. But the broader principle of sharing organisational information with employees and training them to process financial and strategic information is applicable to any organisation. It is argued that open-book accounting, especially in the context of EOBs, provides an exciting alternative to mainstream accounting and financial controls and a welcome addition to the social accounting literature.

Acknowledgements

We are most grateful to the editors and reviewers for their insight and guidance throughout the process.

Notes

1 The paper's second author was recently involved in a research project which involved interviews with 15 EOBs in Scotland. Some of the issues within this paper draw on this empirical study. We are very grateful to the EOBs who participated in this research project for their participation.

2 This is important because the disclosure of a firm as an acquisition target can alert other firms to the willingness of the management to sell the firm which can then lead to an increase in the value of the acquisition target.

3 ‘Open innovation is the purposive use of inflows and outflows of knowledge to, respectively, accelerate internal innovation, and expand the markets for external use of innovation’ (Chiaroni, Chiesa, and Frattini 2011, 34).