"Sustainable" reputational repair strategies in restating polluting companies

Corporate reputation is not a static quality, as business misconduct often causes reputational penalties. An accounting restatement, which is a form of business misconduct, results from a violation of the appropriate application of accounting practices and reflects managers' incentive to obtain short-term benefits. While numerous scholars have focused their attention on the adverse implications caused by financial restatement, relatively little research examined how firms might recover from a loss in reputation. Drawing upon the behavioural theory on reputation repair, we formulate and test our hypotheses on strategical responses to reputational damaging restatements in environmentally sensitive industries.