Differential patterns of textual characteristics and company performance in the chairman's statement
Purpose – The purpose of this paper is to assess the effect of financial performance on the textual characteristics of the chairman's statement. In particular, given the increased motives for poorly performing management to engage in impression management, the paper focuses on whether companies' reporting strategies depend on underlying financial performance. Design/methodology/approach – The research questions are investigated by examining a range of textual characteristics in the chairman's statements of 100 extremely profitable and extremely unprofitable UK listed companies. Findings – The results in this paper indicate that the chairman's statement is subject to impression management techniques as managers' propensity to associate themselves with company financial results is associated with the firm's underlying financial performance. There is also some evidence that unprofitable companies focus more on the future, rather than on past performance. Research limitations/implications – The paper shows the results of this study are based on samples of extremely profitable or extremely unprofitable companies and thus represent the tails of the distribution; further research using random sampling could investigate the extent to which the findings hold for all companies. Additional factors, such as changes in board membership, could also be examined in future research. Practical implications – The research in this paper has implications for the current state of financial reporting whereby auditors do not formally audit, but instead review, the chairman's statement to ascertain its consistency with the financial statements. Originality/value – The paper will be of value to academic researchers in the field of impression management and to users of annual reports who may rely on the chairman's statement for decision making.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 19 (2006)
Issue (Month): 4 (July)
|Contact details of provider:|| Web page: http://www.emeraldinsight.com|
|Order Information:|| Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK|
Web: http://emeraldgrouppublishing.com/products/journals/journals.htm?id=aaaj Email:
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Albert H. Segars, 2001. "Strategic communication through the world wide web: an empirical model of effectiveness in the ceo's letter to shareholders," Journal of Management Studies, Wiley Blackwell, vol. 38(4), pages 535-556, 06.
- Preston, Alistair M. & Wright, Christopher & Young, Joni J., 1996. "IMag[in]ing annual reports," Accounting, Organizations and Society, Elsevier, vol. 21(1), pages 113-137, January.
- Neu, D. & Warsame, H. & Pedwell, K., 1998. "Managing public impressions: environmental disclosures in annual reports," Accounting, Organizations and Society, Elsevier, vol. 23(3), pages 265-282, April.
- Graves, O. Finley & Flesher, Dale L. & Jordan, Robert E., 1996. "Pictures and the bottom line: The television epistemology of U.S. annual reports," Accounting, Organizations and Society, Elsevier, vol. 21(1), pages 57-88, January.
- Aerts, Walter, 1994. "On the use of accounting logic as an explanatory category in narrative accounting disclosures," Accounting, Organizations and Society, Elsevier, vol. 19(4-5), pages 337-353.
- Aerts, Walter, 2005. "Picking up the pieces: impression management in the retrospective attributional framing of accounting outcomes," Accounting, Organizations and Society, Elsevier, vol. 30(6), pages 493-517, August.
When requesting a correction, please mention this item's handle: RePEc:eme:aaajpp:v:19:y:2006:i:4:p:493-511. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Louise Lister)
If references are entirely missing, you can add them using this form.