The hidden layers: how organizational subcultures shape corporate governance disclosures

Purpose This study investigates the underexplored relationship between organizational culture and corporate governance reporting, emphasizing the influence of four cultural subdimensions – competition, creation, collaboration and control – within the Competing Values Framework (CVF). Grounded in a dual theoretical lens of CVF and impression management (IM) theory, the study argues that governance disclosures are shaped not only by internal cultural logics but also by firms' strategic efforts to manage external perceptions of legitimacy and accountability. Design/methodology/approach Using a dataset comprising 2,709 10-K filings from 387 US companies listed on the S&P 500 Index between 2016 and 2022, the study applies textual analysis to capture the presence of cultural dimensions. A flexible pseudo maximum likelihood estimation approach is used to handle the bounded nature of the dependent variable and to assess the impact of cultural subdimensions on governance disclosures. Findings The results indicate that the “control” and “creation” subcultures have a positive relationship with corporate governance reporting, suggesting that structured, innovation-driven environments promote better disclosure practices. Conversely, there is a negative relationship between “competition” and “collaboration” as it relates to governance reporting, indicating that there potentially are risks in organizations that are primarily competition-driven (rivalry) as well as those that are primarily team-oriented (collaboration). These findings are consistent with IM theory's predictions that competitive firms tend to be motivated to hide governance weaknesses and organizations that are highly collaborative tend to use informal means of trust (trust signals) rather than formal external disclosures; however, the specific IM mechanisms measured in this study have not been directly assessed and remain only an interpretation based on the identified patterns. Research limitations/implications While this study provides strong empirical support, it is limited to publicly listed US companies and uses annual filings, which may not capture real-time cultural dynamics. Future research could explore other geographies, firm types or use longitudinal ethnographic data to complement the findings. Practical implications Managers should cultivate cultures that balance innovation with structured control to enhance governance transparency, while implementing disclosure review processes sensitive to the selective presentation risks that Impression Management theory associates with competitive and collaborative cultural orientations. Board oversight should be cautious of overly collaborative or competitive environments that may compromise disclosure quality. The findings offer culture-aware governance, with IM theory providing a theoretical basis for understanding why certain cultural orientations may be associated with less complete disclosures. Social implications The study highlights the importance of a responsible corporate culture in strengthening societal trust. Stakeholders, including policymakers and civil society, should encourage governance standards that prioritize cultural traits aligned with ethical reporting and long-term accountability. Originality/value This research fills a notable gap in corporate governance literature by empirically incorporating corporate culture and its subcomponents into the analysis of governance disclosures. The paper expands the CVF into the novel domain of governance disclosure. Through this lens, cultural functions serve as a foundation for disclosure based on internal organizational logic and external legitimacy-seeking behaviors.