Discretionary disclosure strategies in corporate narratives : incremental information or impression management?

The purpose of this paper is to review and synthesize the literature on discretionary narrative disclosures. We explore why, how, and whether preparers of corporate narrative reports use discretionary disclosures in corporate narrative documents and why, how, and whether users react thereto. To facilitate the review, we provide three taxonomies based on: the motivation for discretionary narrative disclosures (opportunistic behavior, i.e. impression management, versus provision of useful incremental information); the research perspective (preparer versus user); and seven discretionary disclosure strategies. We also examine the whole range of theoretical frameworks utilized by prior research, and we put forward some suggestions for future research.Not applicableEuropean Commission Research Training Progra

Accounting Narratives and Impression Management

This chapter focuses on impression management in accounting communication. Impression management entails the construction of an impression by organisations with the intention to appeal to their audiences, including shareholders, stakeholders, the general public, and the media. If successful, it undermines the quality of financial reporting and capital misallocations may result. What is more, wider social and political consequences include unwarranted support by non-financial stakeholders or by society at large. Impression management is examined by reference to four perspectives: the economic, psychological, sociological, and critical. These variously conceptualise impression management as reporting bias, self-serving bias, symbolic management, and ideological bias

Discretionary disclosure strategies in corporate narratives : incremental information or impression management?

The purpose of this paper is to review and synthesize the literature on discretionary narrative disclosures. We explore why, how, and whether preparers of corporate narrative reports use discretionary disclosures in corporate narrative documents and why, how, and whether users react thereto. To facilitate the review, we provide three taxonomies based on: the motivation for discretionary narrative disclosures (opportunistic behavior, i.e. impression management, versus provision of useful incremental information); the research perspective (preparer versus user); and seven discretionary disclosure strategies. We also examine the whole range of theoretical frameworks utilized by prior research, and we put forward some suggestions for future research.Not applicableEuropean Commission Research Training Progra

Rhetoric and Argument in Social and Environmental Reporting: the Dirty Laundry case

Purpose: The purpose of this paper is to explore the interactive element in social and environmental reporting during a controversy between business organisations and a stakeholder over environmental performance. Design/methodology/approach: The paper adopts Aristotle's triangular framework of the rhetorical situation to examine how the writer, the audience, and the purpose of communication interact in the choice of rhetorical strategies used to persuade others of the validity and legitimacy of a claim during a public controversy. The analysis focuses on the strategies (i.e. moves and their rhetorical realisations) in the form of logos (appealing to logic), ethos (appealing to authority), and pathos (appealing to emotion), with a particular emphasis on metaphor, used to achieve social and political goals. The authors base the analysis on a case study involving a conflict between Greenpeace and six organisations in the sportswear/fashion industry over wastewater discharge of hazardous chemicals. The conflict played out in a series of 20 press releases issued by the parties over a two-month period. Findings: All six firms interacting with Greenpeace in the form of press releases eventually conceded to Greenpeace's demand to eliminate hazardous chemicals from their supply chains. The paper attributes this to Greenpeace's ability to harness support from other key stakeholders and to use rhetoric effectively. Results show the extensive use of rhetoric by all parties. Originality/value: The authors regard legitimacy construction as reliant on communication and as being achieved by organisations participating in a dialogue with stakeholders. For this purpose, the paper develops an analytical framework which situates environmental reporting in a specific rhetorical situation and links rhetoric, argument, and metaphor.                    

Impression management and retrospective sense-making in corporate narratives : a social psychology perspective

Purpose – Prior accounting research views impression management predominantly though the lens of economics. Drawing on social psychology research, we provide a complementary perspective on corporate annual narrative reporting as characterised by conditions of ‘ex post accountability’ (Aerts, 2005, p. 497). These give rise to (i) impression management resulting from the managerial anticipation of the feedback effects of information and/or to (ii) managerial sense-making by means of the retrospective framing of organisational outcomes. Design/methodology/approach – We use a content analysis approach pioneered by psychology research (Newman et al., 2003) which is based on the psychological dimension of word use to investigate the chairmen’s statements of 93 UK listed companies. Findings – Results suggest that firms do not use chairmen’s statements to create an impression at variance with an overall reading of the annual report. We find that negative organisational outcomes prompt managers to engage in retrospective sense-making, rather than to present a public image of organisational performance inconsistent with the view internally held by management (self-presentational dissimulation). Further, managers of large firms use chairmen’s statements to portray an accurate (i.e., consistent with an overall reading of the annual report), albeit favourable, image of the firm and of organisational outcomes (i.e., impression management by means of enhancement). Research limitations – The content analysis approach adopted in the study analyses words out of context. Practical implications – Corporate annual reporting may not only be understood from a behavioural perspective involving managers responding to objectively determined stimuli inherent in the accountability framework, but also from a symbolic interaction perspective which involves managers retrospectively making sense of organisational outcomes and events. Originality/value – Our approach allows us to investigate three complementary scenarios of managerial corporate annual reporting behaviour: (i) self-presentational dissimulation, (ii) impression management by means of enhancement, and (iii) retrospective sense-making.Not applicabl

A new methodology to measure impression management - A linguistic approach to reading difficulty

28th Annual Congress of the European Accounting Association, Göteborg University, Sweden, 18-20 May, 2005Previous studies on impression management in the form of reading ease manipulation use readability formulae, such as Flesch, Fog, and Lix, and cloze scores. Readability formulae are based on word and sentence length and thus constitute crude measures of reading difficulty. Cloze scores do not measure comprehension, but inference. This study uses an approach based on linguistics and psychology, overcoming the validity problems inherent in readability formulae and cloze scores. This is achieved by means of (1) basing its assumptions of what constitutes text on research carried out by discourse analysis, a sub-discipline of linguistics, (2) by means of basing its assumptions of readability on psychological assumptions of comprehension difficulty. What is more, it uses an objective and quantifiable method of measuring readability by means of using computer-assisted corpus analysis. The four measures of reading difficulty in this study are based on the grammatical devices within and between sentences and include the following: (1) amount of cohesive ties within and between sentences, (2) distance between grammatically linked expressions, (3) proportion of new and given information, (4) amount of pronouns in a given text.Author has checked copyrigh

Explaining Communication Choices during Equity Offerings: Market Timing or Impression Management?

Opinions are divided on whether firms use corporate reports (1) to communicate with external parties in a clear and transparent manner (incremental information hypothesis), (2) to shape messages to suit their own agenda, or, worse still, (3) to mislead audiences (impression management hypothesis). Two competing hypotheses are considered in this chapter to explain why equity offerings coincide with stock overpricing. The dominant hypothesis to date – the market timing hypothesis – is that managers opportunistically time equity offerings to coincide with high stock prices. The empirical evidence supporting this hypothesis is ambiguous. The impression management hypothesis offers an alternative perspective. In this context, impression management entails the construction of an impression by organizations with the intention of influencing stockholders’ view of the firm as reflected in the stock price. Managers may engage in impression management, using persuasive language in pre-equity-offering communications (e.g., narrative disclosures), to drive up the stock price in advance of planned equity offerings

Impression management and retrospective sense-making in corporate narratives: A social psychology perspective

Purpose – Prior accounting research views impression management predominantly though the lens of economics. Drawing on social psychology research, this paper seeks to provide a complementary perspective on corporate annual narrative reporting as characterised by conditions of “ex post accountability”. These give rise to impression management resulting from the managerial anticipation of the feedback effects of information and/or to managerial sense-making by means of the retrospective framing of organisational outcomes. Design/methodology/approach – A content analysis approach pioneered by psychology research is used, which is based on the psychological dimension of word use, to investigate the chairmen's statements of 93 UK listed companies. Findings – Results suggest that firms do not use chairmen's statements to create an impression at variance with an overall reading of the annual report. It was found that negative organisational outcomes prompt managers to engage in retrospective sense-making, rather than to present a public image of organisational performance inconsistent with the view internally held by management (self-presentational dissimulation). Further, managers of large firms use chairmen's statements to portray an accurate (i.e. consistent with an overall reading of the annual report), albeit favourable, image of the firm and of organisational outcomes (i.e. impression management by means of enhancement). Originality/value – The approach makes it possible to investigate three complementary scenarios of managerial corporate annual reporting behaviour: self-presentational dissimulation, impression management by means of enhancement, and retrospective sense-making.Annual reports, Chairmen, Social psychology