Merkl-Davies, Doris M. and Brennan, Niamh M. [2007] Discretionary Disclosure Strategies in Corporate Narratives: Incremental Information or Impression Management?”, Journal of Accounting Literature, 26: 116-196.
This paper reviews and synthesizes 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.
Merkl-Davies and Brennan A Conceptual Framework of Impression Management: New...Prof Niamh M. Brennan
In this paper we develop a conceptual framework, based on the concepts of rationality and motivation, which uses theories and empirical research from psychology/behavioural finance, sociology and critical accounting to systematise, advance and challenge research on impression management. The paper focuses on research which departs from economic concepts of impression management as opportunistic managerial discretionary disclosure behaviour resulting in reporting bias or as ‘cheap talk’. Using alternative rationality assumptions, such as bounded rationality, irrationality, substantive rationality and the notion of rationality as a social construct, we conceptualise impression management in alternative ways as (i) self-serving bias, (ii) symbolic management and (iii) accounting rhetoric. This contributes to an enhanced understanding of impression management in a corporate reporting context.
The study of the effects of the pricing policies on an organizations profit: ...EECJOURNAL
The main purpose of this research is to examine the influence of pricing policies on organizations’ profit. The researcher applied a quantitative method to analyze the data in this study, the researcher prepared questionnaire and distributed in the different organizations located in Erbil. The survey was divided into two sections; the first section was demographic analysis which started with respondent’s age, gender, and level of education. The second section of survey consisted of 32 questions concerning pricing policies and its impact on organization profit. 89 participants were involved in the current study; however the researcher used SPSS software in order to analyze the gathered data. Moreover, the researcher aimed to develop the main research hypothesis which stated that there is a positive and significant impact of pricing policies on organization profit. The result of a simple regression analysis demonstrates that the value B for pricing policy is .712 which is greater than .0001 this proves that the main research hypothesis is supported which stated that the there is a positive and significant impact of pricing policy on organization profit.
Approaches to monitoring, evaluation and learning (MEL) are undergoing a data revolution. Yet with greater com-plexity, there is a need for selecting indicators strategically to heighten data validity and ensure indicators reflect strategic aims. The paper therefore sets out criteria for making strategic selections of indicators.
This document discusses business analytics and summarizes key points:
1. Business analytics refers to using data, statistical analysis, and modeling to gain insights and understand business performance to inform planning and decision-making. It involves descriptive, predictive, and prescriptive analytics.
2. The business analytics process involves descriptive analysis to understand patterns in data, predictive analysis to identify trends and relationships, and prescriptive analysis to optimize resource allocation and identify the best course of action.
3. This three-step process helps organizations find opportunities in data, predict future opportunities, and determine how to maximize value and performance by allocating resources optimally. It closely parallels typical organizational decision-making processes.
This document provides a literature review on the problems with implementing performance measurement systems linked to pay in the public sector, based on literature from the UK. It begins with an abstract that outlines the goals and promises of performance-related pay systems in linking individual rewards to organizational performance targets. However, the document notes that while these systems may increase productivity, their impact on employee motivation and behaviors has often been found to be negative. The literature review then examines different performance measurement frameworks and identifies gaps in the research on the strengths and coherence of links between rewards and performance measurement systems in the public sector.
Research report the driver of supply management capability Tran Thang
The main purpose of the paper is to identify the driver factors have effect to supply management capability. Many previous studies involve supply management capability have been mainly concern about general competences and individual skill lists which is considered necessary for the professionals to achieve an efficient procurement system. There are little concentration on the drivers of capability in supply management. This paper point out that if the corporations want to increase supply management capability it is crucial to link the role of purchasing and supply management to the strategy of the corporation, formalize the supply management functions and promote the suppliers network values and suppliers orientation to their business.
This document discusses research on strategic cost management. It defines strategic cost management as decision-making aimed at aligning a company's cost structure with its strategy and optimizing strategy performance. There are two forms: structural cost management uses tools like organizational design to build a cost structure coherent with strategy, while executional cost management uses measurement tools to evaluate cost performance. While management accounting research focuses on executional cost management, other fields provide more insight into structural cost management. The document argues management accounting researchers should create a unified body of knowledge on strategic cost management.
Merkl-Davies and Brennan A Conceptual Framework of Impression Management: New...Prof Niamh M. Brennan
In this paper we develop a conceptual framework, based on the concepts of rationality and motivation, which uses theories and empirical research from psychology/behavioural finance, sociology and critical accounting to systematise, advance and challenge research on impression management. The paper focuses on research which departs from economic concepts of impression management as opportunistic managerial discretionary disclosure behaviour resulting in reporting bias or as ‘cheap talk’. Using alternative rationality assumptions, such as bounded rationality, irrationality, substantive rationality and the notion of rationality as a social construct, we conceptualise impression management in alternative ways as (i) self-serving bias, (ii) symbolic management and (iii) accounting rhetoric. This contributes to an enhanced understanding of impression management in a corporate reporting context.
The study of the effects of the pricing policies on an organizations profit: ...EECJOURNAL
The main purpose of this research is to examine the influence of pricing policies on organizations’ profit. The researcher applied a quantitative method to analyze the data in this study, the researcher prepared questionnaire and distributed in the different organizations located in Erbil. The survey was divided into two sections; the first section was demographic analysis which started with respondent’s age, gender, and level of education. The second section of survey consisted of 32 questions concerning pricing policies and its impact on organization profit. 89 participants were involved in the current study; however the researcher used SPSS software in order to analyze the gathered data. Moreover, the researcher aimed to develop the main research hypothesis which stated that there is a positive and significant impact of pricing policies on organization profit. The result of a simple regression analysis demonstrates that the value B for pricing policy is .712 which is greater than .0001 this proves that the main research hypothesis is supported which stated that the there is a positive and significant impact of pricing policy on organization profit.
Approaches to monitoring, evaluation and learning (MEL) are undergoing a data revolution. Yet with greater com-plexity, there is a need for selecting indicators strategically to heighten data validity and ensure indicators reflect strategic aims. The paper therefore sets out criteria for making strategic selections of indicators.
This document discusses business analytics and summarizes key points:
1. Business analytics refers to using data, statistical analysis, and modeling to gain insights and understand business performance to inform planning and decision-making. It involves descriptive, predictive, and prescriptive analytics.
2. The business analytics process involves descriptive analysis to understand patterns in data, predictive analysis to identify trends and relationships, and prescriptive analysis to optimize resource allocation and identify the best course of action.
3. This three-step process helps organizations find opportunities in data, predict future opportunities, and determine how to maximize value and performance by allocating resources optimally. It closely parallels typical organizational decision-making processes.
This document provides a literature review on the problems with implementing performance measurement systems linked to pay in the public sector, based on literature from the UK. It begins with an abstract that outlines the goals and promises of performance-related pay systems in linking individual rewards to organizational performance targets. However, the document notes that while these systems may increase productivity, their impact on employee motivation and behaviors has often been found to be negative. The literature review then examines different performance measurement frameworks and identifies gaps in the research on the strengths and coherence of links between rewards and performance measurement systems in the public sector.
Research report the driver of supply management capability Tran Thang
The main purpose of the paper is to identify the driver factors have effect to supply management capability. Many previous studies involve supply management capability have been mainly concern about general competences and individual skill lists which is considered necessary for the professionals to achieve an efficient procurement system. There are little concentration on the drivers of capability in supply management. This paper point out that if the corporations want to increase supply management capability it is crucial to link the role of purchasing and supply management to the strategy of the corporation, formalize the supply management functions and promote the suppliers network values and suppliers orientation to their business.
This document discusses research on strategic cost management. It defines strategic cost management as decision-making aimed at aligning a company's cost structure with its strategy and optimizing strategy performance. There are two forms: structural cost management uses tools like organizational design to build a cost structure coherent with strategy, while executional cost management uses measurement tools to evaluate cost performance. While management accounting research focuses on executional cost management, other fields provide more insight into structural cost management. The document argues management accounting researchers should create a unified body of knowledge on strategic cost management.
The document discusses the objectives of business firms. It states that the conventional view is that profit maximization is the sole objective of businesses. However, other objectives exist as well, such as maximizing sales revenue, growth rate, or manager's utility. The document then focuses on profit as a key business objective. It defines accounting profit versus economic profit, with economic profit accounting for implicit opportunity costs. The objectives of business incubators are also outlined, which aim to support startups and increase survival rates through various resources and services.
IPSERA 2016. Final paper by A. Okulov, A. van WeeleAnatoly Okulov
This document discusses relationship governance and its impact on performance outcomes in buyer-supplier relationships. It proposes that trust, commitment, and communication are key determinants of buyer-supplier performance. The study empirically tests these relationships using a sample of 95 Dutch firms, finding that trust, commitment, and communication positively influence quality improvement and customer satisfaction. Relationship governance mechanisms like contracts can also impact these relationships. Effective governance requires balancing formal mechanisms like contracts with informal aspects like trust and communication.
Governance of buyer supplier relationship in morocco context qualitative studyAlexander Decker
This document summarizes a research paper about governance of buyer-supplier relationships in Morocco. It discusses how collaborative, long-term relationships can provide competitive advantages but also notes that many such relationships fail. The document reviews contractual and relational approaches to understanding buyer-supplier relationships. It discusses how relational approaches consider non-contractual factors like trust, commitment, and learning that influence relationship effectiveness and sustainability. Finally, it examines theories of power and dependence in relationships and how mutual dependence between buyers and suppliers can encourage cooperative behavior.
A study of Data Mining concepts used in Customer Relationship Management (CRM...IJSRD
Customer relationship management (CRM) has evolved as an approach based on generating positive relationships with customers, increasing customer loyalty, and expanding customer lifetime value [1]. To understand the needs of customers and providing value-added services are recognized as factors that regulate the success or failure of the organizations. In the recent years, technology enhancement made customer relationship easier in various fields such as marketing, sales, service and Management Information Technology [2]. To deliver customer value, there are concepts such as data mining and data warehousing with the use of technology. Even through data mining concepts, organizations can easily find out their valuable customers and helps in making better decisions. There are data mining tools which answer business questions that were time-consuming consuming in the past. These tools simplify these questions and make customer relationship management effective [3]. This researcher work is focused on understanding the consumer’s behavior for themed weddings. The themed weddings management strategies are based on technology, business and customer perspectives. The customer preferences are measured using Regency, Frequency and Monetary (RFM) method. Business strategies are defined to understand the customer preference towards themed weddings management and the technologies such as WEB 2.0 and data mining tool Weka are used. The survey technique, and thematic content analysis using data mining tools, to accomplish the goals of today’s customer relationship management philosophy for themed weddings management.
This document analyzes structural changes in the Brazilian industry from 1982-1997, a period of economic and institutional uncertainty. It explores how macroeconomic changes interacted with firm behaviors and industrial structure at the micro level. The analysis focuses on how firms adapted strategies in areas like sales, finance, production and investment to develop flexibility in responding to uncertainty. While uncertainties decreased after 1994, the analysis suggests firms developed in different ways and uncertainty still influences industry composition.
Effect of Supply Chain Management Competencies on Organization Performance a ...paperpublications3
Abstract: Supply chains as one of the governance aspect are complex systems with different structures and power proportions between partners. Managers would be in a better position to meet the challenges of global supply chain processes if they understand the implementation issues and their roles on supply chain effectiveness. The main purpose of the study is to investigate the effect of supply chain management competencies on organizational performance and specifically the effect of innovation Orientation on organizational performance. Explanatory research design was used. The population of study comprised 244 employees from selected Parastatals in Nairobi City County. Questionnaires were used to collect data and data was analyzed using descriptive statistics like means, frequencies, and percentages, and inferential statistics, Pearson correlation and multiple regressions. Results indicated that innovation orientation has significant and positive effect on organizational performance. This concludes that firms whose managers have innovation orientation improve performance. It is recommended that there should be further research and development on innovative and leading organizational practices in order to enhance performance and need for supply chain management policies and procedures that follow an appropriate sequence and structure.
When intelligence is dysfunctional for achieving sales performance | Professi...Professional Capital
This document discusses a study that investigates how general mental ability (GMA) interacts with other skills and capabilities like social competence and thinking styles to impact sales performance. The study finds that GMA alone does not predict sales performance, but it does when combined with other factors. Specifically, high GMA leads to the highest sales performance when combined with high social competence, but the lowest performance when combined with low social competence. High GMA also interacts with judicial thinking styles to positively impact sales performance. The study suggests sales success requires both cognitive abilities (GMA) and their application through social skills and thinking styles.
This document summarizes a meta-analysis of research on drivers of sales performance published between 1982-2008. The analysis refined an existing classification scheme for sales performance determinants into six categories (role perceptions, aptitude, skill level, motivation, personal factors, organizational/environmental) with multiple sub-categories. The meta-analysis found five sub-categories had significant relationships with sales performance: selling-related knowledge, degree of adaptiveness, role ambiguity, cognitive aptitude, and work engagement. Additionally, the relationships between determinants and sales performance were moderated by measurement method, research context, and sales type variables. The results suggest as the economy moves toward knowledge-intensive, salespeople may function more as knowledge brokers,
This article examines how the market structure impacts the pricing objectives of service firms. It reviews literature on pricing objectives and market structure factors. The study aims to empirically investigate how market structure influences the pricing objectives pursued by service companies. Data was collected through interviews with 170 service firms across six sectors in Greece. The findings show that firms prioritize objectives around maintaining existing customers and attracting new ones to ensure long-term market position, while also considering financial factors. The impact of market structure on pricing objectives is examined.
11.vol. 0003www.iiste.org call for paper no. 2 pp 117-142Alexander Decker
This document discusses issues related to corporate performance and its relationship to contextual factors like business environment, strategy, organizational structure, and control systems. It examines how corporate social performance, defined as stakeholder relationships, can moderate this relationship and improve overall corporate performance. The document reviews literature on strategic management, accounting, and contingency theory to develop an integrated framework analyzing how contextual variables and strategic behaviors influence financial and social performance.
A study on the chain restaurants dynamic negotiation games of the optimizatio...ijcsit
In the era of meager profit, production costs often become an important factor affecting SMEs’ operating
conditions, and how to effectively reduce production costs has become an issue of in-depth consideration
for the business owners. Especially, the food and beverage (F&B) industry cannot accurately predict the
demand. It many cause demand forecast fall and excess or insufficient inventory pressure. Companies of
the F&B industry may be even unable to meet immediate customer needs. They are faced great challenges
in quick response and inventory pressure. This study carried out the product inventory model analysis of
the most recent year’s sales data of the fresh food materials for chain restaurants in a supply chain region
with raw material suppliers and demanders. Moreover, this study adopted the multi-agent dynamic strategy
game to establish the joint procurement decision model negotiation algorithm for analysis and verification
by simulation cases to achieve the design of dynamic negotiation optimization mechanism for the joint
procurement of food materials. Coupled with supply chain management 3C theory for food material
inventory management, we developed the optimization method for determining the order quantities of the
chain restaurants. For product demand forecast, we applied the commonality model, production and
delivery capacity model, and the model of consumption and replenishment based on market demand
changes in categorization and development. Moreover, with the existence of dependencies between product
demands as the demand forecast basis, we determined the appropriate inventory model accordingly.
This document summarizes a research paper that examines the impact of customer relationship management (CRM) technology on firm and relationship performance in distribution networks. The research paper aims to 1) identify factors that promote CRM implementation among small retailers 2) determine if integrating customer information management and relationship marketing better explains CRM performance and 3) investigate if manufacturer support contributes to relationship quality. Statistical analysis of the research model found the intensity of CRM implementation by small retailers is influenced by perceived importance of customer information, manufacturer support, and competitiveness, which in turn improves CRM performance and relationship quality.
This chapter discusses techniques for assessing an organization's external environment over the short, medium, and long term. It describes PEST analysis and Porter's Five Forces model for short to medium term analysis of political, economic, social, and technological factors. It also covers scenario planning and the Delphi method for longer term forecasting through expert panels and developing alternative future scenarios. The key is for organizations to constantly reassess dynamic environmental forces through these qualitative and quantitative techniques.
This document provides an overview of quantitative techniques used for business analysis, specifically covering topics in statistics. It includes a table of contents listing 8 chapters that cover topics such as data collection, presentation of data through tables and graphs, measures of central tendency and dispersion, probability, and introduction to statistics. The introduction discusses how statistics can be used descriptively to summarize data or inferentially to draw conclusions about populations. It emphasizes the importance of statistics across many fields.
The document discusses value chain analysis, including its key aspects and how to conduct one. It describes the activities in Porter's value chain framework, including primary and support activities. It provides tips for writing a good value chain analysis, such as analyzing each activity's contribution to competitive strategies. Sources of information and limitations of the model are also reviewed.
This document discusses a study investigating the relationship between knowledge management capability, supply chain management practices, and firm performance in manufacturing companies in Rasht, Iran. It presents a conceptual model showing how knowledge management capabilities, SCM practices, and performance are related. The document reviews literature on knowledge management capabilities, SCM practices, and performance measures. It develops hypotheses that knowledge management capabilities are positively related to firm performance and SCM practices, and that SCM practices are positively related to firm performance. The goal of the study is to evaluate how knowledge management capabilities and SCM practices impact firm performance.
International Journal of Database Management Systems (IJDMS)ijdms
Business process intelligence improves operational efficiency that is essential for achieving business objectives, besides facilitating competitive advantage. As an organization is a collection of business processes, operations in one business process do influence or have relationship with other business processes. Consequently, from an operational intelligence standpoint, insights from one business process may have their genesis or implications in the performance of some other business process. This paper outlines a framework to sequence insights in the form of performance inferencing across multiple business processes. The framework logically sequences insights across business processes in the form of business rules. The paper illustrates the concepts through a prototype that is implemented in Oracle’s PL/SQL language.
La combinación de gestión del conocimiento y gestión del cambio en procesos y servicios de Consultoría.
En este trabajo se analiza la relación entre los procesos de cambio y la gestión del conocimiento, entre los partidarios de gestión del cambio y facilitadores de la Gestión del Conocimiento.
This document discusses marketing information systems and their components. It defines a marketing information system as a management information system designed to support marketing decision making. The key components of a marketing information system include internal reporting systems, marketing research systems, marketing intelligence systems, and analytical model banks. These components work together to gather, analyze, and distribute pertinent information to marketing decision makers.
The Impact of Advertisement on Sales: Case Study in Some Selected Telecommuni...Liibaan Sagal
Abstract
This study was set out to establish the extent to which advertisement affects sales volume of selected
telecommunication companies in Mogadishu, Somalia; specifically the study intended to establish the (i) profile
of the respondents, (ii) extent of which advertisement, (iii) level sales volume (iii) whether there is a relationship
in the extent of which advertisement and the level of sales volume in selected telecommunication companies in
Mogadishu, Somalia. The study used a survey design; specifically descriptive correlations and descriptive
comparative; data were collected from 133 respondents using self administered questionnaires as the key data
collection instruments. The study findings revealed that there was a high level of which advertisement, there was
also high level of sales volume, the extent of advertisement and the level sales volume significantly differed
among telecommunication companies in Mogadishu city is significantly correlated with sales volume from the
above findings appropriate conclusion and recommendations include those for further research were made.
El documento presenta una propuesta para expandir la red de metro de una ciudad. Propone cuatro nuevas líneas de metro y una lanzadera de autobús que conectaría varias estaciones y lugares importantes como la estación de AVE, la feria de muestras, la plaza del aeropuerto y el barrio de Arcosur. La propuesta mejoraría el acceso al transporte público, con el 70% de los vecinos a menos de 5 minutos a pie de una parada y el 83% a menos de 8 minutos.
Detection of highvelocity_material_from_the_win_wind_collision_zone_of_eta_ca...Sérgio Sacani
This document reports on observations of the Eta Carinae binary system using infrared spectroscopy from 2008-2009 and archival ultraviolet and optical data. It detects high-velocity material of up to -1900 km/s in He I absorption during the 2009 periastron passage, as well as up to -2100 km/s in Si IV absorption in earlier data. Lower ionization lines only show absorption up to -1200 km/s, indicating the high-velocity material is faster and more ionized than the primary star's wind. Additional observations over multiple cycles detect high-velocity He I absorption near periastron. The high-velocity material likely originates in the wind collision zone 15-45 AU from the primary star.
The document discusses the objectives of business firms. It states that the conventional view is that profit maximization is the sole objective of businesses. However, other objectives exist as well, such as maximizing sales revenue, growth rate, or manager's utility. The document then focuses on profit as a key business objective. It defines accounting profit versus economic profit, with economic profit accounting for implicit opportunity costs. The objectives of business incubators are also outlined, which aim to support startups and increase survival rates through various resources and services.
IPSERA 2016. Final paper by A. Okulov, A. van WeeleAnatoly Okulov
This document discusses relationship governance and its impact on performance outcomes in buyer-supplier relationships. It proposes that trust, commitment, and communication are key determinants of buyer-supplier performance. The study empirically tests these relationships using a sample of 95 Dutch firms, finding that trust, commitment, and communication positively influence quality improvement and customer satisfaction. Relationship governance mechanisms like contracts can also impact these relationships. Effective governance requires balancing formal mechanisms like contracts with informal aspects like trust and communication.
Governance of buyer supplier relationship in morocco context qualitative studyAlexander Decker
This document summarizes a research paper about governance of buyer-supplier relationships in Morocco. It discusses how collaborative, long-term relationships can provide competitive advantages but also notes that many such relationships fail. The document reviews contractual and relational approaches to understanding buyer-supplier relationships. It discusses how relational approaches consider non-contractual factors like trust, commitment, and learning that influence relationship effectiveness and sustainability. Finally, it examines theories of power and dependence in relationships and how mutual dependence between buyers and suppliers can encourage cooperative behavior.
A study of Data Mining concepts used in Customer Relationship Management (CRM...IJSRD
Customer relationship management (CRM) has evolved as an approach based on generating positive relationships with customers, increasing customer loyalty, and expanding customer lifetime value [1]. To understand the needs of customers and providing value-added services are recognized as factors that regulate the success or failure of the organizations. In the recent years, technology enhancement made customer relationship easier in various fields such as marketing, sales, service and Management Information Technology [2]. To deliver customer value, there are concepts such as data mining and data warehousing with the use of technology. Even through data mining concepts, organizations can easily find out their valuable customers and helps in making better decisions. There are data mining tools which answer business questions that were time-consuming consuming in the past. These tools simplify these questions and make customer relationship management effective [3]. This researcher work is focused on understanding the consumer’s behavior for themed weddings. The themed weddings management strategies are based on technology, business and customer perspectives. The customer preferences are measured using Regency, Frequency and Monetary (RFM) method. Business strategies are defined to understand the customer preference towards themed weddings management and the technologies such as WEB 2.0 and data mining tool Weka are used. The survey technique, and thematic content analysis using data mining tools, to accomplish the goals of today’s customer relationship management philosophy for themed weddings management.
This document analyzes structural changes in the Brazilian industry from 1982-1997, a period of economic and institutional uncertainty. It explores how macroeconomic changes interacted with firm behaviors and industrial structure at the micro level. The analysis focuses on how firms adapted strategies in areas like sales, finance, production and investment to develop flexibility in responding to uncertainty. While uncertainties decreased after 1994, the analysis suggests firms developed in different ways and uncertainty still influences industry composition.
Effect of Supply Chain Management Competencies on Organization Performance a ...paperpublications3
Abstract: Supply chains as one of the governance aspect are complex systems with different structures and power proportions between partners. Managers would be in a better position to meet the challenges of global supply chain processes if they understand the implementation issues and their roles on supply chain effectiveness. The main purpose of the study is to investigate the effect of supply chain management competencies on organizational performance and specifically the effect of innovation Orientation on organizational performance. Explanatory research design was used. The population of study comprised 244 employees from selected Parastatals in Nairobi City County. Questionnaires were used to collect data and data was analyzed using descriptive statistics like means, frequencies, and percentages, and inferential statistics, Pearson correlation and multiple regressions. Results indicated that innovation orientation has significant and positive effect on organizational performance. This concludes that firms whose managers have innovation orientation improve performance. It is recommended that there should be further research and development on innovative and leading organizational practices in order to enhance performance and need for supply chain management policies and procedures that follow an appropriate sequence and structure.
When intelligence is dysfunctional for achieving sales performance | Professi...Professional Capital
This document discusses a study that investigates how general mental ability (GMA) interacts with other skills and capabilities like social competence and thinking styles to impact sales performance. The study finds that GMA alone does not predict sales performance, but it does when combined with other factors. Specifically, high GMA leads to the highest sales performance when combined with high social competence, but the lowest performance when combined with low social competence. High GMA also interacts with judicial thinking styles to positively impact sales performance. The study suggests sales success requires both cognitive abilities (GMA) and their application through social skills and thinking styles.
This document summarizes a meta-analysis of research on drivers of sales performance published between 1982-2008. The analysis refined an existing classification scheme for sales performance determinants into six categories (role perceptions, aptitude, skill level, motivation, personal factors, organizational/environmental) with multiple sub-categories. The meta-analysis found five sub-categories had significant relationships with sales performance: selling-related knowledge, degree of adaptiveness, role ambiguity, cognitive aptitude, and work engagement. Additionally, the relationships between determinants and sales performance were moderated by measurement method, research context, and sales type variables. The results suggest as the economy moves toward knowledge-intensive, salespeople may function more as knowledge brokers,
This article examines how the market structure impacts the pricing objectives of service firms. It reviews literature on pricing objectives and market structure factors. The study aims to empirically investigate how market structure influences the pricing objectives pursued by service companies. Data was collected through interviews with 170 service firms across six sectors in Greece. The findings show that firms prioritize objectives around maintaining existing customers and attracting new ones to ensure long-term market position, while also considering financial factors. The impact of market structure on pricing objectives is examined.
11.vol. 0003www.iiste.org call for paper no. 2 pp 117-142Alexander Decker
This document discusses issues related to corporate performance and its relationship to contextual factors like business environment, strategy, organizational structure, and control systems. It examines how corporate social performance, defined as stakeholder relationships, can moderate this relationship and improve overall corporate performance. The document reviews literature on strategic management, accounting, and contingency theory to develop an integrated framework analyzing how contextual variables and strategic behaviors influence financial and social performance.
A study on the chain restaurants dynamic negotiation games of the optimizatio...ijcsit
In the era of meager profit, production costs often become an important factor affecting SMEs’ operating
conditions, and how to effectively reduce production costs has become an issue of in-depth consideration
for the business owners. Especially, the food and beverage (F&B) industry cannot accurately predict the
demand. It many cause demand forecast fall and excess or insufficient inventory pressure. Companies of
the F&B industry may be even unable to meet immediate customer needs. They are faced great challenges
in quick response and inventory pressure. This study carried out the product inventory model analysis of
the most recent year’s sales data of the fresh food materials for chain restaurants in a supply chain region
with raw material suppliers and demanders. Moreover, this study adopted the multi-agent dynamic strategy
game to establish the joint procurement decision model negotiation algorithm for analysis and verification
by simulation cases to achieve the design of dynamic negotiation optimization mechanism for the joint
procurement of food materials. Coupled with supply chain management 3C theory for food material
inventory management, we developed the optimization method for determining the order quantities of the
chain restaurants. For product demand forecast, we applied the commonality model, production and
delivery capacity model, and the model of consumption and replenishment based on market demand
changes in categorization and development. Moreover, with the existence of dependencies between product
demands as the demand forecast basis, we determined the appropriate inventory model accordingly.
This document summarizes a research paper that examines the impact of customer relationship management (CRM) technology on firm and relationship performance in distribution networks. The research paper aims to 1) identify factors that promote CRM implementation among small retailers 2) determine if integrating customer information management and relationship marketing better explains CRM performance and 3) investigate if manufacturer support contributes to relationship quality. Statistical analysis of the research model found the intensity of CRM implementation by small retailers is influenced by perceived importance of customer information, manufacturer support, and competitiveness, which in turn improves CRM performance and relationship quality.
This chapter discusses techniques for assessing an organization's external environment over the short, medium, and long term. It describes PEST analysis and Porter's Five Forces model for short to medium term analysis of political, economic, social, and technological factors. It also covers scenario planning and the Delphi method for longer term forecasting through expert panels and developing alternative future scenarios. The key is for organizations to constantly reassess dynamic environmental forces through these qualitative and quantitative techniques.
This document provides an overview of quantitative techniques used for business analysis, specifically covering topics in statistics. It includes a table of contents listing 8 chapters that cover topics such as data collection, presentation of data through tables and graphs, measures of central tendency and dispersion, probability, and introduction to statistics. The introduction discusses how statistics can be used descriptively to summarize data or inferentially to draw conclusions about populations. It emphasizes the importance of statistics across many fields.
The document discusses value chain analysis, including its key aspects and how to conduct one. It describes the activities in Porter's value chain framework, including primary and support activities. It provides tips for writing a good value chain analysis, such as analyzing each activity's contribution to competitive strategies. Sources of information and limitations of the model are also reviewed.
This document discusses a study investigating the relationship between knowledge management capability, supply chain management practices, and firm performance in manufacturing companies in Rasht, Iran. It presents a conceptual model showing how knowledge management capabilities, SCM practices, and performance are related. The document reviews literature on knowledge management capabilities, SCM practices, and performance measures. It develops hypotheses that knowledge management capabilities are positively related to firm performance and SCM practices, and that SCM practices are positively related to firm performance. The goal of the study is to evaluate how knowledge management capabilities and SCM practices impact firm performance.
International Journal of Database Management Systems (IJDMS)ijdms
Business process intelligence improves operational efficiency that is essential for achieving business objectives, besides facilitating competitive advantage. As an organization is a collection of business processes, operations in one business process do influence or have relationship with other business processes. Consequently, from an operational intelligence standpoint, insights from one business process may have their genesis or implications in the performance of some other business process. This paper outlines a framework to sequence insights in the form of performance inferencing across multiple business processes. The framework logically sequences insights across business processes in the form of business rules. The paper illustrates the concepts through a prototype that is implemented in Oracle’s PL/SQL language.
La combinación de gestión del conocimiento y gestión del cambio en procesos y servicios de Consultoría.
En este trabajo se analiza la relación entre los procesos de cambio y la gestión del conocimiento, entre los partidarios de gestión del cambio y facilitadores de la Gestión del Conocimiento.
This document discusses marketing information systems and their components. It defines a marketing information system as a management information system designed to support marketing decision making. The key components of a marketing information system include internal reporting systems, marketing research systems, marketing intelligence systems, and analytical model banks. These components work together to gather, analyze, and distribute pertinent information to marketing decision makers.
The Impact of Advertisement on Sales: Case Study in Some Selected Telecommuni...Liibaan Sagal
Abstract
This study was set out to establish the extent to which advertisement affects sales volume of selected
telecommunication companies in Mogadishu, Somalia; specifically the study intended to establish the (i) profile
of the respondents, (ii) extent of which advertisement, (iii) level sales volume (iii) whether there is a relationship
in the extent of which advertisement and the level of sales volume in selected telecommunication companies in
Mogadishu, Somalia. The study used a survey design; specifically descriptive correlations and descriptive
comparative; data were collected from 133 respondents using self administered questionnaires as the key data
collection instruments. The study findings revealed that there was a high level of which advertisement, there was
also high level of sales volume, the extent of advertisement and the level sales volume significantly differed
among telecommunication companies in Mogadishu city is significantly correlated with sales volume from the
above findings appropriate conclusion and recommendations include those for further research were made.
El documento presenta una propuesta para expandir la red de metro de una ciudad. Propone cuatro nuevas líneas de metro y una lanzadera de autobús que conectaría varias estaciones y lugares importantes como la estación de AVE, la feria de muestras, la plaza del aeropuerto y el barrio de Arcosur. La propuesta mejoraría el acceso al transporte público, con el 70% de los vecinos a menos de 5 minutos a pie de una parada y el 83% a menos de 8 minutos.
Detection of highvelocity_material_from_the_win_wind_collision_zone_of_eta_ca...Sérgio Sacani
This document reports on observations of the Eta Carinae binary system using infrared spectroscopy from 2008-2009 and archival ultraviolet and optical data. It detects high-velocity material of up to -1900 km/s in He I absorption during the 2009 periastron passage, as well as up to -2100 km/s in Si IV absorption in earlier data. Lower ionization lines only show absorption up to -1200 km/s, indicating the high-velocity material is faster and more ionized than the primary star's wind. Additional observations over multiple cycles detect high-velocity He I absorption near periastron. The high-velocity material likely originates in the wind collision zone 15-45 AU from the primary star.
El documento discute la importancia del lenguaje corporal y no verbal en la comunicación humana. Explica que el cuerpo habla por sí mismo a través de gestos, posturas, expresiones faciales y distancia física, y que estos elementos comunican información sobre las emociones e intenciones de una persona. También señala que diferentes culturas tienen estilos distintos de comunicación corporal.
The goal of this talk was to present alternative ways to address the growing fragmentation in the smartphone app world. The talk starts out discussing “web” apps then dives into “native” apps.
El documento define los conceptos de bienes de colección, bienes tangibles de colección, bienes de inversión y cómo los violines Stradivarius y Guarneri del Gesù se han convertido en una alternativa de inversión rentable desde 1970. No existen reglas estrictas sobre lo que constituye un objeto de colección y los bienes de colección son activos físicos que aumentan de valor debido a su escasez o demanda.
El documento describe los pasos involucrados en pulsar una tecla en el teclado y ver el carácter resultante en la pantalla, incluyendo la detección de la pulsación por el procesador E/S, la comunicación con la CPU y la memoria para almacenar y recuperar el dato, y la visualización final en el monitor.
Tabla resumen de Camaras Aragon con los INCOTERMS 2000 de la CCI.
Existen un par de fallos, ¿quien me los dice?...
Cuidado con la transferencia del dominio y de los riesgos...
Teneis mas informacion en la home de mi web www.asesoriainternacional.es y en mi blog:-)
Este catálogo presenta la empresa Delvalleaguayo ubicada en Vitoria-Gasteiz, España en la dirección Landaluzea 10, con número de teléfono 945-29.00.45, fax 945-29.03.26 y correo electrónico e información en su página web www.delvalleaguayo.com.
El documento describe varios asentamientos y lugares históricos en Chile central que fueron visitados por el explorador francés Dumond D'Urville en 1842, incluyendo la bahía de Talcahuano, la isla Quiriquina, y las ruinas de la iglesia de Santo Domingo en Penco.
MAXIVAPOR es la primera empresa en Cúcuta especializada en limpieza, desinfección y esterilización con vapor y rayos UV. Ofrece servicios de limpieza para empresas y hogares utilizando maquinaria e insumos de limpieza biodegradables para mantener ambientes limpios y desinfectados. Cuenta con el apoyo de la Cámara de Comercio de Cúcuta y atiende clientes como cooperativas, clínicas dentales, hoteles y bancos.
Creando un único punto de acceso de úsqueda en una Biblioteca Virtual. La experiencia de GERIÓN (metabuscador). Jose Maria Carrion. 2ª Jornada Técnica Bibliotecas de Ciencias de la Salud en el siglo XXI: electrónicas, digitales, virtuales e híbridas (Madrid, 2008)
Emilio presenta su historia personal y datos biográficos en 3 oraciones. Nació en Saraguro el 20 de noviembre de 2008 y cumplirá 2 años, invitando a su fiesta de cumpleaños. Sus padres son Víctor Hugo Hidalgo y Gabriela Berru. Proporciona su dirección de correo electrónico Glendybb@slidesaher.com para conocerlo mejor.
Documentation sur le camp de concentration de Mauthausen éditée à l'occasion de l'exposition "La part visible des camps - les photographies du camp de concentration de Mauthausen" par l'Amicale des anciens prisonniers politiques Luxembourgeois de Mauthausen.
Plus de détails : http://www.secondeguerremondiale.public.lu/fr/publications/mauthausen/
Eptisa TI Innovación en las Ciudades Inteligentes. Perspectivas y proyectos e...Aurora López García
Presentación de soluciones, servicios y referencias de proyectos de innovación de Eptisa TI en el ámbito de las Administraciones Locales. De las smart cities a la salud y bienestar públicos
The AcuVision system is an intelligent surveillance system that can connect up to 16 cameras with 1080p resolution for high-definition video monitoring and recording. It allows live viewing on mobile devices via an app and features multiple video formats, event detection capabilities, and 2D/3D video analytics. The document then provides more details on specific AcuVision models like the PowerBrick series that can power the system, and features such flame/smoke detection, people/vehicle counting, and secure zone monitoring.
Similar to Merkl-Davies, Doris M. and Brennan, Niamh M. [2007] Discretionary Disclosure Strategies in Corporate Narratives: Incremental Information or Impression Management?”, Journal of Accounting Literature, 26: 116-196.
Merkl-Davies, Doris M., Brennan, Niamh M. and McLeay, Stuart J. [2011] Impres...Prof Niamh M. Brennan
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.
Brennan, Niamh M., Guillamon-Saorin, Encarna and Pierce, Aileen [2009] Impres...Prof Niamh M. Brennan
Purpose – This paper develops a holistic measure for analysing impression management and for detecting bias introduced into corporate narratives as a result of impression management.
Design/methodology/approach – Prior research on the seven impression management methods in the literature is summarised. Four of the less-researched methods are described in detail, and are illustrated with examples from UK Annual Results’ Press Releases (ARPRs). A method of computing a holistic composite impression management score based on these four impression management methods is developed, based on both quantitative and qualitative data in corporate narrative disclosures. An impression management bias score is devised to capture the extent to which impression management introduces bias into corporate narratives. An example of the application of the composite impression management score and impression management bias score methodology is provided.
Findings – While not amounting to systematic evidence, the 21 illustrative examples suggest that impression management is pervasive in corporate financial communications using multiple impression management methods, such that positive information is exaggerated, while negative information is either ignored or is underplayed.
Originality/value – Four impression management methods are described in detail, illustrated by 21 examples. These four methods are examined together. New impression management methods are studied in this paper for the first time. This paper extends prior impression management measures in two ways. First, a composite impression management score based on four impression management techniques is articulated. Second, the composite impression management score methodology is extended to capture a measure for bias, in the form of an impression management bias score. This is the first time outside the US that narrative disclosures in press releases have been studied.
This document discusses impression management in accounting communication and corporate reporting. It provides an overview of four perspectives on impression management in accounting research: economic, psychological, sociological, and critical. It also examines seven communication choices that constitute categories of analysis when studying impression management, such as bias and self-serving behavior. The document concludes by discussing organizational reputation, image, and legitimacy, and how impression management can be used to establish, maintain, or restore these.
A review of balanced scorecard use in small to medium enterprisesPhuong Dx
This document summarizes research on the use of balanced scorecards (BSC) in small and medium enterprises (SMEs). It finds that survey research shows limited awareness or use of BSCs among SMEs, while case studies of SMEs using BSCs report benefits like improved performance. This disparity may be due to SMEs in surveys being too small to benefit from a BSC, while case study subjects tend to be larger SMEs that self-selected to use a BSC. The document also notes that BSC use in SMEs depends on factors like size, growth rates, and ownership structure that influence complexity. BSCs may help fast-growing SMEs deal with rising complexity as
03 14 brennan merkl davies accounting narratives and impression managementProf Niamh M. Brennan
This chapter examines impression management in accounting communication through four theoretical perspectives: economic, psychological, sociological, and critical. Impression management refers to organizations constructing impressions to appeal to audiences like shareholders and stakeholders. Discretionary accounting narratives in corporate reports are analyzed for seven communication choices that could constitute impression management. The chapter concludes by discussing implications for corporate reporting practice and suggestions for future research on how impression management may undermine reporting quality and influence stakeholder perceptions.
A REVIEW OF LITERATURE IN MANAGEMENT CONTROL SYSTEM (MCS), BUSINESS STRATEGY,...Christine Maffla
This document reviews 10 articles on the relationship between management control systems (MCS), business strategy, and firm performance. Most articles studied manufacturing industries in Australia and Canada, with managers and top management as the most common key informants. The majority used quantitative methods. Findings showed MCS can support both cost leadership and differentiation strategies, though different MCS may be needed for each. Interactive MCS were found to support differentiation strategies and influence innovation and financial performance. Overall the literature revealed linkages between MCS, strategy, and performance.
Influence of Knowledge Management Processes on Organizational Performance in ...inventionjournals
This research attempts to establish a link between knowledge management processes and organizational performance in knowledge intensive service sectors. The key dimensions of knowledge management processes have been identified which could influence the organizational performance. Metric has been developed for the empirical investigation of the relationships between these research constructs. Structural Equation Modelling (SEM) using partial least square techniques has been used to test these hypotheses with a sample size of 491 knowledge workers (330 - Higher educational institutions and 161 from the IT companies) to investigate the empirical relationships between the factors. All the four hypotheses were supported. The testing of the hypotheses justified the identification of the key dimensions of KM as the critical success factors in terms of the organizational performance. Implications of the study would enable the strategic planning managers to make their knowledge management processes more effective so as to enhance the organizational performance
A proposed model of balance score cards for enterprise governanceAlexander Decker
This document proposes a model for a balanced scorecard approach to enterprise governance. It begins by defining enterprise governance and discussing existing governance frameworks. It then reviews balanced scorecards, which use financial and non-financial metrics across four perspectives - financial, customer, internal processes, and learning and growth. The document suggests that a balanced scorecard could provide a framework to evaluate an enterprise's governance across conformance with standards and policies, as well as performance and strategic objectives. It proposes testing a model that applies the balanced scorecard approach to comprehensively assess an enterprise's governance arrangements and outcomes.
11.a proposed model of balance score cards for enterprise governanceAlexander Decker
This document proposes a model for balanced scorecards for enterprise governance. It consists of two parts:
1. The conformance balanced scorecard with 5 dimensions: financial indicators, customer satisfaction, operations systems, employee factors, and compliance.
2. The performance balanced scorecard with 6 dimensions: SWOT analysis, strategy implementation, technology needs, HR decisions, mergers and acquisitions, and risk management.
The model is intended to help boards of directors evaluate enterprise governance in terms of both accountability (conformance) and value creation (performance). It draws on prior literature discussing balanced scorecards and their use in assessing strategic decision making, resource allocation, and risk management at the enterprise level.
The document discusses publishing companies' online strategies and the match between their strategic objectives and available resources/capabilities. It finds that while publishers aim to support their brands and get closer to customers with online services, their long-term objectives of growth and profitability are difficult to achieve given their limited resources. Publishers lack technical resources and skills for developing online applications and targeting new customer groups. Their "pea shooter" capabilities are insufficient for taking down the "profitability bear". The study identifies new capability areas needed, such as technical coordination and online advertising/selling skills.
Evaluation has been identified as a hot topic in theory of media relations and public relation, and hence, a number of practices have been conducted by researchers for providing evidence regarding the key contributions of a specific campaign. In addition to this, scholars of public relations have been seen arguing that as an industry, media relations has not reached full scope of maturity. In this context, measurement and evaluation have been identified as significant elements in the increased level of professionalism across the field (Coffman, 2003).
There has been achievement of varying record of success by media campaigns in impacting pro- social and health behaviour as highlighted by the diversified range of cases. Implementing and designing effective campaigns hold the requirement of disciplined approach in which the team of campaign performs a thorough analysis of the situations (Park, 2014). This helps in the development of pragmatic and theory- based strategic plan, while implementing the placement and creation of messages with respect to principles of practices in effective media campaign. In addition to this, diligent efforts are required for the enhancement of relationship at work between the evaluators and designers of campaign in comparison with creative professionals responsible for the translation of concepts within messages (Coffman, 2002).
Are QM models aligned with Industry 4.docxsiyoumnegash1
This document discusses whether quality management (QM) models are aligned with Industry 4.0. It notes that studies have shown QM models can hamper innovation and responsiveness. The document then discusses how Industry 4.0 has enabled new business processes like co-production and knowledge sharing between organizations. However, the document states that QM models have not considered their alignment with Industry 4.0. It proposes a framework with five dimensions to assess how well QM models address aspects of Industry 4.0 like intellectual capital management, using big data to predict quality, and managing networked organizations.
This document discusses strategic planning and positive versus normative aspects of strategy. It provides examples of positive strategies that have been employed, such as increasing market share by hiring employees with disabilities to better understand and serve customer needs. The document also discusses business models and examples like component business models and e-business models. Finally, it cautions against a "cookie cutter" approach to strategy and argues that strategies must be tailored to each organization's specific situation.
Module 5 Module 5 OverviewProvides the learning outcomes on wh.docxgilpinleeanna
This document provides an overview of Module 5 which examines issues related to human resource management in the context of the global business environment. It discusses evaluating trends in global HR, managing international employees, training international staff, the roles of HR leadership, and transforming HR through technology such as web-based applications. The module investigates how effective HR improves multicultural communication and organizational performance in multinational corporations.
The document discusses communication audits, which involve evaluating an organization's communication processes and systems. A communication audit aims to determine if all stakeholders are receiving intended messages, identify strengths and weaknesses, and indicate areas for improvement. The key steps of conducting an audit involve securing management commitment, identifying current practices, setting success standards, developing an action plan, and measuring results. Common audit methods include questionnaires, interviews, focus groups, and analyzing communication outputs and stakeholder feedback. The goals are to improve communication quality and relationships within the organization.
This document is a project report submitted by Mr. Ojas Nitin Narsale, an M.Com student at the Parle Tilak Vidyalaya Association's M.L. Dahanukar College of Commerce in Mumbai, India. The report is on the topic of ratio analysis and was completed in the 2016-2017 academic year under the guidance of Prof. Karim. The report includes an introduction, objectives, methodology, literature review on ratio analysis, calculations of key financial ratios for a company, analysis of the results, and a summary.
Customer knowledge management viasocial media the case of S.docxalanrgibson41217
This document analyzes Starbucks' use of social media for customer knowledge management (CKM). It finds that Starbucks deploys a wide range of social media tools for CKM purposes, including branding, marketing and transforming customers from passive recipients to active contributors of innovation. Starbucks also uses effective strategies to encourage customer knowledge sharing on social media. The case study suggests that social media can support CKM efforts for traditional brick-and-mortar businesses like Starbucks, not just online businesses.
This document discusses three models of managerial analysis:
1) The structure-conduct-performance paradigm focuses on harmonizing planning and control within individual organizations.
2) The systemic approach views businesses as open systems within larger environments and emphasizes transversal risk management.
3) Value-based management aims to maximize shareholder value through decision-making, resource allocation, and performance assessment.
Governance is responsible for development, coordination, economic objectives, and social legitimacy. In complex global environments, risk management models become more sophisticated.
This document discusses strategic marketing planning. It addresses identifying environmental factors that can influence strategy, identifying market segments through research, and how to approach specific segments. Market research methods can be used to gain insight into customer needs and purchase decisions. Both secondary data sources and primary research like surveys can help identify relevant market segments defined by variables like demographics. How segments are approached depends on understanding consumer wants and needs as revealed through research.
Discuss the complexity of problem definition and the importance of a.pdfaroramobiles1
Discuss the complexity of problem definition and the importance of accurate data to successfully
apply quantitaive analysis in management.
Solution
The quantitative methods contain two component parts, the quantitative and method, with
asymmetrical attention to the quantitative term.
Speaking about method, interest is focused upon the so- called Scientific Method. Science is the
mastering of things of the real world, by knowledge about the truth. The term method drives to
dialogue on methodology in science which is clouded, as the phrase scientific method is used in
two different ways. The one is very general, as a process of improving understanding. Although
vague, it is considered as a powerful definition, since it leaves room for criticizing dogmatic
clinging to beliefs and prejudices, or appreciating careful and systematic reasoning about
empirical evidence. The other is the traditional sense, and supports that there is a unique standard
method, which is central to identity of the science. In effect, scientific progress requires many
methods, so there is not a unique standard method, though taught as a straightforward testing
hypotheses derived from theories in order to test those theories. The more acceptable definition
of scientific method is a process by which scientists, collectively and over time, endeavour to
construct an accurate (that is reliable, consistent and non-arbitrary) representation of the real
world. The popular hypothetic-deductive standard method is excluding consideration of the
process of discovery in science. Rather, research is defined as a penetrating process of learning
and understanding the substance of actual things and facts, by use of different methods. The
research process incorporates formulation of a research issue and construction of a conceptual
framework, by using all available information sources.
The quantitative methods have a number of attributes, such as: they employ measurable data to
reach comparable and useful results, assume alternative plans for achieving objectives, plan data,
concerning observations collection, configuration and elaboration by statistical and econometric
stochastic methods, check data reliability, choose appropriate sampling method, use carefully the
estimates of the parameters for forecasting and planning purposes, etc. since they derive from ex-
post data concerning past.
In an increasingly complex business environment managers have to grapple with a problems and
issues which range from the relatively trivial to the strategic. In such an environment the
quantitative techniques have an important role. It is obvious that life for any manager in any
organization is becoming increasingly difficult and complex. Although there are many factors
contributing to this, figure 1 illustrates some of the major pressures making decision making
increasingly problematic. Organizations find them selves operating in an increasingly complex
environment. Changes in government policy, privatiz.
Similar to Merkl-Davies, Doris M. and Brennan, Niamh M. [2007] Discretionary Disclosure Strategies in Corporate Narratives: Incremental Information or Impression Management?”, Journal of Accounting Literature, 26: 116-196. (20)
Brennan, Niamh and Clarke, Peter [1985] Objective Tests in Financial Accounti...Prof Niamh M. Brennan
A multiple choice questionnaire (MCQ) style examination typically consists of 20/30 short statements, each of which is followed by a number of alternative answers. Only one answer is strictly correct. This allows the examiner to mark candidates' responses in an objective rather than subjective fashion. This style of examination question has recently been adopted by the Institute of Chartered Accountants in Ireland and is also used in third level institutions.
MCQs have a number of advantages over traditional examination formats. First, they allow the examiner to ask questions on every topic on the syllabus and thus test the candidates range of knowledge. Perhaps more importantly, correction of answers is entirely objective and comparatively easy. Large numbers of scripts can be objectively tested in a short space of time.
Objective tests can also be an effective teaching tool. The topics covered in each chapter are logically sequenced so that as the student progresses through the chapter they build up their know¬ledge and skills in relation to that topic. In addition, the book emphasises problem areas and attempts to help students avoid common mistakes in financial accounting. Thus the tutor can indicate the correct solution and also explain or seek responses as to why other plausible answers are incorrect to the given statement. Such a process should ensure greater understanding of the topic under discussion.
This book is suitable for students taking introductory financial accounting examinations of the professional accountancy bodies, third level accounting students or other students studying introductory financial accounting courses. The three revision examinations at the end of this book are reproduced with the kind permission of the Institute of Chartered Accountants in Ireland.
Brennan, Niamh M., Merkl-Davies, Doris M., and Beelitz, Annika [2013] Dialogi...Prof Niamh M. Brennan
We conceptualise CSR communication as a process of reciprocal influence between organisations and their audiences. We use an illustrative case study in the form of a conflict between firms and a powerful stakeholder which is played out in a series of 20 press releases over a two-month period to develop a framework of analysis based on insights from linguistics. It focuses on three aspects of dialogism, namely (i) turn-taking (co-operating in a conversation by responding to the other party), (ii) inter-party moves (the nature and type of interaction action characterising a turn i.e., denial, apology, excuse), and (iii) intertextuality (the intensity and quality of verbal interaction between the parties). We address the question: What is the nature and type of verbal interactions between the parties? First we examine (a) whether the parties verbally interact and then (b) whether the parties listen to each other.
We find evidence of dialogism suggesting that CSR communication is an interactive process which has to be understood as a function of the power relations between a firm and a specific stakeholder. Also, we find evidence of intertextuality in the press releases by the six firms which engage in verbal interaction with the stakeholder. We interpret this as linguistic evidence of isomorphic processes relating to CSR practices resulting from the pressure exerted by a powerful stakeholder. The lack of response by ten firms that fail to issue press releases suggests a strategy of ‘watch-and-wait’ with respect to the outcome of the conflict.
Brennan, Niamh M. and Flynn, Maureen A. [2013] Differentiating Clinical Gover...Prof Niamh M. Brennan
This document proposes new definitions to distinguish between clinical governance, clinical management, and clinical practice. It analyzes 29 existing definitions of "clinical governance" and finds they confuse governance, management, and practice roles. The document suggests 3 new separate definitions: clinical governance focuses on accountability, oversight, and setting standards; clinical management focuses on efficient service delivery through processes and resources; and clinical practice focuses on delivering high-quality care. Clearer distinctions between these roles could help implement clinical governance more effectively.
Brennan, Niamh M. and Conroy, John P. [2013] Executive Hubris: The Case of a ...Prof Niamh M. Brennan
Purpose – Can personality traits of Chief Executive Officers (CEOs) be detected at-a-distance? Following newspaper speculation that the banking crisis of 2008 was partly caused by CEO hubris, this paper analyses the CEO letters to shareholders of a single bank over ten years for evidence of CEO personality traits, including: (i) narcissism (a contributor to hubris), (ii) hubris, (iii) overconfidence and (iv) CEO-attribution. Following predictions that hubris increases the longer individuals occupy positions of power, the research examines whether hubristic characteristics intensify over time.
Design/methodology/approach – This paper takes concepts of hubris from the clinical psychology literature and applies them to discourses in CEO letters to shareholders in annual reports. The research comprises a longitudinal study of the discretionary narrative disclosures in the CEO letters to shareholders in eight annual reports, benchmarked against disclosures in the CEO letters to shareholders of the previous and subsequent CEOs of the same organisation.
Findings – Results point to evidence of narcissism and hubris in the personality of the Bank CEO. Over half the sentences analysed were found to contain narcissistic-speak. In 45% of narcissistic-speak sentences, there were three of more symptoms of hubris – what Owen and Davison (2009) describe as extreme hubristic behavior. In relation to CEO overconfidence, only seven (2%) sentences contained bad news. More than half of the good news was attributed to the CEO and all the bad news was attributed externally. The research thus finds evidence of hubris in the CEO letters to shareholders, which became more pronounced the longer the CEO served.
Research limitations/implications – The analysis of CEO discourse is highly subjective, and difficult to replicate.
Originality/value – The primary contribution of this research is the adaptation of the 14 clinical symptoms of hubris from clinical psychology to the analysis of narratives in CEO letters to shareholders in annual reports to reveal signs of CEO hubris.
Craig, Russell J. and Brennan, Niamh M. [2012] An Exploration of the Relation...Prof Niamh M. Brennan
This paper proposes a taxonomy to assist in more clearly locating research on aspects of the association between corporate reputation and corporate accountability reporting. We illustrate how our proposed taxonomy can be applied by using it to frame our exploration of the relationship between measures of reputation and characteristics of the language choices made in CEO letters to shareholders. Using DICTION 5.0 software we analyse the content of the CEO letters of 23 high reputation US firms and 23 low reputation US firms. Our results suggest that company size and visibility each have a positive influence on the extent to which corporate reputation is associated with the language choices made in CEO letters. These results, which are anomalous when compared with those of Geppert and Lawrence (2008), highlight the need for caution when assessing claims about the effects on corporate reputation arising from the language choice in narratives in corporate annual reports.
Brennan, Niamh [1996] Disclosure of Profit Forecasts during Takeover Bids. Do...Prof Niamh M. Brennan
This thesis examines disclosure of 250 profit forecasts in 701 UK takeover bids in the period 1988 to 1992 against five research issues:
• Factors influencing disclosure of forecasts
• Influence of prevailing market expectations
• Effect of disclosure of forecasts on the outcome of bids
• Factors influencing disclosure content in forecasts
• Whether forecasts disclosed convey good news
Logit analysis and negative binomial regression are the two primary statistical techniques used to analyse the results.
Results show the domination of the takeover-context of the research. Two variables accounted for almost all the influence on disclosure of forecasts for both bidders and targets: bid horizon and type of bid. Probability of disclosure of a forecast is greater the shorter the bid horizon and during contested bids.
In addition to bid horizon and type of bid, for bidders, year, value of bid and purchase consideration were significant, and for targets value of bid and industry were significant in one of the two models estimated.
Evidence supporting the hypothesis that forecast disclosure is more likely when market expectations are out of line with actual results is provided.
There is some evidence that forecasts by targets affect the outcome of bids, but there is no such evidence for bidders.
Takeover-context variables and forecast-related variables were most relevant in determining disclosures in forecasts. Disclosure content in forecasts was significantly greater during contested bids, in voluntary forecasts and in longer period forecasts. Significantly more assumptions were disclosed by target forecasters and in longer horizon forecasts.
Evidence shows a tendency to disclose good news, with some disclosure of bad news. Good news forecasts are more likely during contested bids. Targets are more likely to disclose bad news forecasts, but when bidders disclose bad news it tends to be worse on average than targets’ bad news.
Brennan, Niamh M., Daly, Caroline A. and Harrington, Claire S. [2010] Rhetori...Prof Niamh M. Brennan
This exploratory study extends the analysis of narrative disclosures from routine reporting contexts such as annual reports and press releases to non-routine takeover documents where the financial consequences of narrative disclosures can be substantial. Rhetoric and argument in the form of impression management techniques in narrative disclosures are examined. Prior thematic content analysis methods for analysing good and bad news disclosures are adapted to the attacking and defensive themes in the defence documents of target companies subject to hostile takeover bids. The paper examines the incidence, extent and implications of impression management in ten hostile takeover defence documents issued by target companies listed on the London Stock Exchange between 1 January 2006 and 30 June 2008. Three impression management strategies – thematic, visual and rhetorical manipulation – are investigated using content analysis methodologies. The findings of the research indicate that thematic, visual and rhetorical manipulation is evident in hostile takeover defence documents. Attacking and defensive sentences were found to comprise the majority of the defence documents analysed. Such sentences exhibited varying degrees of visual and rhetorical emphasis, which served to award greater or lesser degrees of prominence to the information conveyed by target company management.
While exploratory in nature, this paper concludes with suggestions for future more systematic research allowing for greater generalisations from the findings.
Brennan, Niamh M. and Solomon, Jill [2008] Corporate Governance, Accountabili...Prof Niamh M. Brennan
Purpose – This paper reviews traditional corporate governance and accountability research, to suggest opportunities for future research in this field. The first part adopts an analytical frame of reference based on theory, accountability mechanisms, methodology, business sector/context, globalisation and time horizon. The second part of the paper locates the seven papers in the special issue in a framework of analysis showing how each one contributes to the field. The paper presents a frame of reference which may be used as a 'roadmap' for researchers to navigate their way through the prior literature and to position their work on the frontiers of corporate governance research.
Design/methodology/approach – The paper employs an analytical framework, and is primarily discursive and conceptual.
Findings – The paper encourages broader approaches to corporate governance and accountability research beyond the traditional and primarily quantitative approaches of prior research. Broader theoretical perspectives, methodological approaches, accountability mechanism, sectors/contexts, globalisation and time horizons are identified.
Research limitations/implications – Greater use of qualitative research methods are suggested, which present challenges particularly of access to the “black box” of corporate boardrooms.
Originality/value – Drawing on the analytical framework, and the papers in the special issue, the paper identifies opportunities for further research of accountability and corporate governance.
Brennan, Niamh M. and McGrath, Mary [2007] Financial Statement Fraud: Inciden...Prof Niamh M. Brennan
This document summarizes a research paper that studied 14 cases of financial statement fraud from the US and Europe. It found that senior management was usually responsible, and the most common method of fraud was recording false sales to meet external earnings forecasts. Fraud was typically discovered by management, either existing or new management taking over.
Brennan, Niamh and Kelly, John [2007] A Study of Whistleblowing Among Trainee...Prof Niamh M. Brennan
Over the last number of years whistleblowers have been gaining prominence. This paper investigates some of the factors that influence the propensity or willingness to blow the whistle among trainee auditors. Three categories of factors are examined: audit firm organisational structures, personal characteristics of whistleblowers and situational variables.
A survey of 240 final year students of the Institute of Chartered Accountants in Ireland was undertaken. Trainee auditors (just about to sit their finals) were asked about their confidence in internal and external reporting structures in their firms. Using four scenarios, audit trainees were questioned on their willingness to challenge an audit partner’s inappropriate response to concerns raised during the audit. Finally, audit trainees were asked about the influence of legal protection on their likelihood of whistleblowing.
Results indicate that where firms have adequate formal structures for reporting wrongdoing, trainee auditors are more likely to report wrongdoing and have greater confidence that this will not adversely affect their careers. Training increases this confidence. Trainee auditors also express a willingness to challenge an audit partner’s unsatisfactory response to wrongdoing. Significant differences were found in attitudes depending on whether the reports of wrongdoing were internal or external. The willingness to report wrongdoing externally reduces for older (aged over 25) trainees.
Brennan, Niamh [2006] Boards of Directors and Firm Performance: Is there an E...Prof Niamh M. Brennan
Reflecting investor expectations, most prior corporate governance research attempts to find a relationship between boards of directors and firm performance. This paper critically examines the premise on which this research is based. An expectations gap approach is applied for the first time to implicit expectations which assume a relationship between firm performance and company boards. An expectations gap has two elements: A reasonableness gap and a performance gap. Seven aspects of boards are identified as leading to a reasonableness gap. Five aspects of boards are identified as leading to a performance gap. The paper concludes by suggesting avenues for empirically testing some of the concepts discussed in this paper.
Brennan, Niamh and Gray, Sidney J. [2005] The Impact of Materiality: Accounti...Prof Niamh M. Brennan
This paper comprises a review of the literature on materiality in accounting. The paper starts by examining the context in which materiality is relevant, and the problems arising from applying the concept in practice. Definitions of materiality from legal, accounting and stock exchange sources are compared. The relevance of materiality to various accounting situations is discussed. Methods of calculating quantitative thresholds are described and illustrated. Prior research is reviewed, focussing on materiality thresholds, and on the materiality judgments of auditors, preparers and financial statement users. The paper concludes with some suggestions for future research and for policy makers concerning this best kept accounting secret.
Brennan, Niamh [2005] Accounting Expertise in Litigation and Dispute Resoluti...Prof Niamh M. Brennan
This document summarizes the role of expert witnesses in litigation, with a focus on accounting experts. It discusses how expert witnesses are used to assist courts in resolving complex issues outside the knowledge of judges and juries. The expert's primary duty is to the court, not to the hiring party. The summary also outlines important qualities of expert testimony like being unbiased, relevant, reliable, and cost-effective. It notes that experts can face civil liability for negligence if these qualities are lacking. Finally, it provides an overview of the process for selecting and engaging expert witnesses.
Brennan, Niamh and McDermott, Michael [2004] Alternative Perspectives on Inde...Prof Niamh M. Brennan
This paper examines the issue of independence of boards of directors and non-executive direc¬tors of companies listed on the Irish Stock Exchange. Based on information published in annual reports, the study found that most Irish listed companies were complying with the Combined Code’s recommendations for a balanced board structure, albeit with only 60 per cent having majority-independent boards. The study found a lack of consistency in inter-preting the definition of “independence”, a lack of disclosure of information and, by apply¬ing criteria generally regarded as prerequisite to independence of non-executive directors, certain situations which imposed upon their independence.
Brennan, Niamh [2003] Accounting in crisis: A story of auditing, accounting, ...Prof Niamh M. Brennan
Recent accounting scandals are the product of multiple failings of auditing, accounting, corporate governance and of the market. In discussing the many factors that led to failure, this paper attempts to provide insights on regulatory inadequacies that contributed to these problems. At the centre is human failure – in particular greed and weakness. Reforms in progress are briefly examined, with the caveat that no reforms will ever fully cater for human weakness.
Brennan, Niamh [2001] Reporting Intellectual Capital in Annual Reports: Evide...Prof Niamh M. Brennan
This paper examines the extent to which a sample of 11 knowledge-based Irish listed companies is adopting methodologies for reporting of intellectual capital in their annual reports. Their market and book values were compared and a content analysis of the annual reports of the 11 listed companies was conducted. With the exception of two of the 11 listed companies, significant differences in market and book values were found suggesting that knowledge-based Irish listed companies have a substantial level of non-physical, intangible, intellectual capital assets. The level of disclosure of intellectual capital attributes by the 11 listed companies studied was low.
Brennan, Niamh and Connell, Brenda [2000] Intellectual Capital: Current Issue...Prof Niamh M. Brennan
Substantial differences between company book values and market values indicate the presence of assets not recognised and measured in company balance sheets. Intellectual capital assets account for a substantial proportion of this discrepancy. At present, companies are not required to report on intellectual capital assets which leaves the traditional accounting system ineffective for measuring the true impact of such intangibles.
Regulations currently in place are analysed in this paper. Prior research concerning intellectual capital is next presented. Frameworks for intellectual capital are compared. Indicators used for the measurement of intellectual capital are examined. The research methodologies employed for collecting information about the use of intellectual capital accounts in companies are reviewed.
Guidelines available to companies for reporting on intellectual capital are considered and also the efforts made towards developing an accounting standard for intellectual capital. Finally, current issues and policy implications of accounting for intellectual capital in the future are examined.
Brennan, Niamh and Hourigan, Denis [2000] Corporate Reporting on the Internet...Prof Niamh M. Brennan
This document summarizes a study examining corporate reporting practices on the Internet by Irish companies in 1998. The study analyzed 109 Irish listed and semi-state companies. It found that 35 (37%) listed companies and 15 (100%) semi-state companies had a website. Larger companies and those in the services and financial industries were more likely to have a website. The study aimed to examine the level of Internet usage, types of financial information disclosed, and characteristics of companies with websites, such as size, leverage, and industry.
Brennan, Niamh [2000] An Empirical Examination of Forecast Disclosure by Bidd...Prof Niamh M. Brennan
This paper examines voluntary disclosure of profit forecasts by bidding companies during takeovers. Disclosure is examined from two perspectives: (i) factors influencing disclosure and (ii) the influence of good news and bad news on disclosure.
Takeover documents published during 701 takeover bids for public companies listed on the London Stock Exchange in the period 1988 to 1992 were examined.
Two variables accounted for almost all the influences on disclosure of forecasts: bid horizon and type of bid. Probability of forecast disclosure was greater the shorter the bid horizon and during contested bids. In addition, there was some evidence that the nature of the purchase consideration offered by the bidder (cash or paper) and the industry of the bidder influenced disclosure. Disclosure was significantly more likely in paper bids and in the durable goods industry.
Forecasts were more likely to be disclosed when firms had good news to report.
Brennan, Niamh and Marston, Claire [1999] A Comparative Analysis of Required ...Prof Niamh M. Brennan
This paper explores the extent to which there are significant differences in disclosure requirements under US, UK, international accounting standards. Previous research into international disclosure diversity has focused on an analysis of disclosure practices in different countries rather than on disclosures required by regulations in different countries.
Financial disclosures required by UK professional regulations and by International Accounting Standards (IASs) are summarised and classified using Barth and Murphy’s (1994) categorisation by purpose of disclosure and by category and subject. US, UK and international required disclosures are compared and areas of divergence are highlighted.
Although differences in required disclosures between the three regulatory regimes are evident from the analysis, these differences are not significant in the multivariate models tested. A notable difference is greater required disclosures in the UK/IASs concerning entity structures (business combinations, consolidations, segmental reporting etc.).A greater proportion of US required disclosures address risks and potentials and assess returns. A much greater proportion of UK/IASs disclosures related to items recognised in accounts.
The Financial Accounting Standards Board is currently examining the issue of disclosure effectiveness in the US. By highlighting areas of diversity in required disclosures in the US, UK and internationally this study will add insights to this discussion of disclosure effectiveness.
Brennan, Niamh and Marston, Claire [1999] A Comparative Analysis of Required ...
Merkl-Davies, Doris M. and Brennan, Niamh M. [2007] Discretionary Disclosure Strategies in Corporate Narratives: Incremental Information or Impression Management?”, Journal of Accounting Literature, 26: 116-196.
1. Discretionary Disclosure Strategies in Corporate Narratives:
Incremental Information or Impression Management?
Doris M. Merkl-Davies
Bangor University
Niamh M. Brennan
University College Dublin
(Published in Journal of Accounting Literature, 26 (2007): 116-196)
This research is associated with the Accounting Harmonisation and Standardisation in Europe:
Enforcement, Comparability and Capital Market Effects research project (Contract No. HPRN-CT-
2000-00062) carried out by the HARMONIA network and funded by the European Commission
Research Training Program. We thank the anonymous referee and the editor for their helpful
comments. We are indebted to Catherine O’Dea for her expert assistance in putting the finishing
touches and professionalizing the paper.
2. Discretionary Disclosure Strategies in Corporate Narratives:
Incremental Information or Impression Management?
1.0 INTRODUCTION
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.
Recent corporate scandals have highlighted the importance of and drawn
attention to financial reporting quality [Clarke and Dean, 2007]; [Donoher et al.,
2007]. If discretionary narrative disclosures are used for impression management
rather than incremental information purposes, then financial reporting quality will be
undermined. If managers engage in impression management, and if users are
susceptible to it, then adverse capital misallocations may result. Thus, discretionary
narrative disclosures constitute an important area of accounting research.
The scope of the paper is discretionary narrative disclosure strategies in the
narrative sections (both verbal and numerical information) of corporate documents
(excluding the financial statements).1 The most commonly researched corporate
documents are annual reports that Neu et al. [1998] state are effective vehicles for
impression management due to the proximity of the narrative sections to the auditor’s
report, which may add credibility to the disclosures. We also examine prior research
on other vehicles for narrative disclosure strategies including press releases,
managerial forecasts, websites, and conference calls. However, the paper does not
cover impression management studies of graphs and pictures in corporate documents.
Although laborious [Abrahamson and Amir, 1996], nonetheless it is important to
engage in impression management research to understand how managers
1
This is in contrast to the voluntary disclosure literature that focuses on specific discretionary
disclosures in corporate report documents within a pre-defined framework of topic categories with the
aim of constructing a disclosure index capturing disclosure quantity and quality.
1
3. communicate with shareholders and stakeholders, possibly to manage their
perceptions.
The emphasis of the paper is primarily on preparer (i.e. managerial) and user
behaviors rather than on methodological aspects of prior research.2
The paper makes the following contributions. First, we classify prior research
into the two competing schools of thought: research that assumes that managerial
discretionary disclosure choices are opportunistic and constitute impression
management; and research that assumes that they constitute value-relevant
information aimed at improving investor decision making. We consider possible
theoretical underpinnings of the two competing positions. We discuss different
theories explaining managers’ motives to engage in impression management or to
provide incremental information. Taking a user perspective, we identify various
theories, in particular from behavioral finance and from psychology that explain why
investors might be susceptible to managerial impression management.
Second, we bring together the preparer and user perspective, investigating
managerial discretionary disclosure strategies (the preparer perspective) and responses
thereto (the user perspective). Taking a preparer perspective, we examine all the
discretionary disclosure strategies applied by managers in corporate narratives,
classifying them into seven categories. This allows the full array of discretionary
disclosure strategies to be assessed as a whole rather than strategy-by-strategy as has
been the tendency in prior research. This enables a better understanding of the wide
range of techniques applied by managers to manage impressions/enhance disclosure
quality. From a user perspective, we bring together both capital markets and
behavioral research on whether discretionary narrative disclosure strategies influence
decision making and whether, therefore, they are effective.
Third, we suggest future research opportunities. From the preparer
perspective, we use alternative theories from the accounting, management, and social
psychology literature to suggest additional impression management motivations and
strategies not previously considered in a financial reporting context. From the user
perspective, we take different theories and prior research in behavioral finance and
psychology to suggest new avenues for studying the effect of discretionary narrative
2
For more detailed discussions of the various methodologies used by previous research, refer to Jones
and Shoemaker [1994]; Merkl-Davies et al. [2005]; Guillamon-Saorin et al. [2007].
2
4. disclosures on users, and to explain why users might be influenced by managerial
impression management.
The remainder of the paper is organized as follows. Section 2 discusses the
two competing schools of thought. As part of that discussion, we consider the
importance and consequences of impression management. Section 3 examines
research from a preparer perspective, including the seven discretionary disclosure
strategies implemented by managers in corporate narratives. Section 4 presents
research from the user perspective. In both preparer and user sections, we discuss
theoretical frameworks in prior research and prior empirical research findings.
Limitations of prior research and suggestions for future research are set out in Section
5. Section 6 draws together the evidence on whether discretionary narrative disclosure
strategies constitute impression management or value-relevant information.
2.0 IMPRESSION MANAGEMENT AND RESEARCH TAXONOMIES
Prior research assumes that discretionary disclosures either (a) contribute to
useful decision making by overcoming information asymmetries between managers
and firm outsiders; or (b) constitute opportunistic behavior whereby managers exploit
information asymmetries between them and firm outsiders through engaging in biased
reporting, i.e. impression management.
How does impression management differ from incremental information?
Hooghiemstra [2000, p. 60] defines impression management as “a field of study
within social psychology studying how individuals present themselves to others to be
perceived favourably by others.” In a corporate reporting context, impression
management is regarded as attempts “to control and manipulate the impression
conveyed to users of accounting information” [Clatworthy and Jones, 2001, p. 311].
As a result, managers are presumed to use corporate reports as impression
management vehicles to “strategically…manipulate the perceptions and decisions of
stakeholders” [Yuthas et al., 2002, p. 142]. These quotes implicitly assume that
managers consciously engage in these practices.
Previous research on financial reporting quality has focused on earnings
management [e.g. Burgstahler and Eames, 2006] and fraud [e.g. Rezaee, 2005].
However, firms also use more subtle forms of influencing outsiders’ impressions of
firm performance and prospects, namely by manipulating the content and presentation
of information in corporate documents with the purpose of “distort[ing] readers’
3
5. perceptions of corporate achievements” [Godfrey et al., 2003, p. 96]. In the
accounting literature this is referred to as impression management.
The opportunity for impression management in corporate reports is increasing.
Narrative disclosures have become longer and more sophisticated over the last few
years. According to the Arthur Andersen [2000, p. 7] survey of 100 listed UK
companies, narrative material occupies 57 percent of the annual report in 2000, as
compared with 45 percent in 1996. Narrative annual report sections provide “almost
twice the amount of…information as do the basic financial statements” [Smith and
Taffler, 2000, p. 624]. This growing importance of descriptive sections in corporate
documents provides firms with the opportunity to overcome information asymmetries
by presenting more detailed information and explanation, thereby increasing their
decision-usefulness. However, they also offer an opportunity for presenting financial
performance and prospects in the best possible light, thus having the opposite effect.
In addition to the increased opportunity for opportunistic discretionary disclosure
choices, impression management is also facilitated in that corporate narratives are
largely unregulated.3
If impression management takes place, what are its consequences? Impression
management, like earnings management, involves “managers us[ing] judgment in
financial reporting…to alter financial reports to…mislead some stakeholders about
the underlying economic performance of the company” [Healy and Wahlen, 1999, p.
368]. Whereas incremental disclosures provide value-relevant information about
future cash flows and result in improved decision making, impression management
leads to potential capital misallocations [Holthausen, 1990]. Thus, it entails the same
serious risk of adverse capital misallocations as earnings management.
Example 1 illustrates excerpts from the annual report of Enron immediately
prior to its collapse. The highlighted phrases are consistent with a positive bias
introduced by Enron. We believe this is a reflection of opportunistic managerial
3
The regulation of narrative disclosures is complex. The Securities and Exchange Commission (SEC)
Rule 10b-5 prohibits untrue statements or omission of material facts that would render disclosures
misleading. In addition, under AU Section 550 of the Public Company Accounting Oversight Board
(PCAOB), auditors are required to consider whether information (including its presentation) outside the
audited financial statements is materially inconsistent with information (or its presentation) appearing
in the financial statements. On December 4, 2001 the Securities and Exchange Commission (SEC)
warned that firms could face civil fraud lawsuits for potentially misleading pro forma statements if they
do not also provide a “clear and comprehensible” explanation of the pro forma calculation [Johnson
and Schwartz, 2005]. The International Accounting Standards Board [2005] has published a discussion
paper Management commentary, with a view to developing standards or guidance on this topic.
4
6. behavior aimed at manipulating readers’ perceptions of corporate achievements rather
than an attempt to provide investors with useful incremental information. Deloitte
Consulting [2003] found that Enron’s corporate communications became increasingly
vague and ambiguous as the firm’s financial situation began to deteriorate. It would
appear that Enron managed impressions with words when the underlying numbers
told another story. Craig and Amernic [2004] conclude that Enron’s 2000 letter to
shareholders “has…serious implications regarding the authors’ truth-telling [and]
their grasp of even a rough socially-constructed reality” [p. 826].
Example 1
Extracts from Enron’s Letter to Shareholders, Annual Report 2000 (emphasis added)
Enron’s performance in 2000 was a success by any measure, as we continued to outdistance the
competition and solidify our leadership in each of our major businesses. In our largest business,
wholesale services, we experienced an enormous increase of 59 percent in physical energy deliveries.
Our retail energy business achieved its highest level ever of total contract value. Our newest business,
broadband services, significantly accelerated transaction activity, and our oldest business, the interstate
pipelines, registered increased earnings. The company’s net income reached a record $1.3 billion in
2000. [p. 4]
Enron hardly resembles the company we were in the early days. During our 15-year history, we have
stretched ourselves beyond our own expectations. We have metamorphosed from an asset-based
pipeline and power generating company to a marketing and logistics company whose biggest assets are
its well-established business approach and its innovative people. [pp. 6-7]
Our performance and capabilities cannot be compared to a traditional energy peer group. Our results put
us in the top tier of the world’s corporations. We have a proven business concept that is eminently
scalable in our existing businesses and adaptable enough to extend to new markets. [p. 7]
Our talented people, global presence, financial strength and massive market knowledge have created
our sustainable and unique businesses. EnronOnline will accelerate their growth. We plan to leverage
all of these competitive advantages to create significant value for our shareholders. [p. 7]
Table 1 summarizes the two competing positions. Prior research tends to take
one or other position, often implicitly and without discussion. US researchers tend to
adopt the incremental information assumption, whereas non-US researchers are more
likely to take an impression management standpoint.4 Only eight studies (all US) have
effectively distinguished between these two competing schools [Lang and Lundholm,
2000]; [Frederickson and Miller, 2004]; [Barton and Mercer, 2005]; [Bowen et al.,
2005]; [Johnson and Schwartz, 2005]; [Krische, 2005]; [Elliott, 2006]; [Matsumoto et
al., 2006].
4
Different methodological traditions are influential in this respect, with US researchers tending to
adopt more quantitative methods and non-US researchers taking a more qualitative approach.
5
7. The impression management interpretation of managerial discretionary
disclosure strategies is based on a weak form of market efficiency. This assumes that
investors are unable to assess managerial bias in the short term. Based on this
assumption, managers engage in impression management to influence the firm’s share
price, which can lead to capital misallocations and increased compensation, via stock
options, for managers [Adelberg, 1979]; [Rutherford, 2003]; [Courtis, 2004a, p. 293].5
By contrast, the incremental information school is based on a semi-
strong/strong form of market efficiency where investors are capable of assessing
reporting bias. The efficient market hypothesis states that all market participants have
rational expectations about future returns, which implies that, on average, the market
is able to assess reporting bias [Hand, 1990]. This assumes that biased reporting
(including impression management) would lead to higher cost of capital and reduced
share price performance. As managers’ compensation is linked to stock price
performance, managers have no economic incentives to engage in impression
management. Thus, advocates of the incremental information school deny the
existence of impression management [Baginski et al., 2000, 2004]. On the contrary,
managers are assumed to have economic incentives to engage in unbiased reporting as
it enhances their reputation and compensation [Baginski et al., 2000].
As shown in Table 1, different theories are invoked to explain preparer and
user behavior: agency theory is predominant in explaining managers’ (i.e. preparers’)
behaviors; behavioral finance and expected utility theories explain users’ behaviors.
Assumptions concerning the rational expectations or otherwise of preparers and users
are also relevant.
5
However, it has to be noted that some proponents of the opportunistic perspective subscribe to a semi-
strong form of market efficiency, as they believe that investors are able to assess managerial bias. They
regard impression management as “executive hyperbole”, i.e. a harmless corporate reporting ritual with
no capital market consequences [Courtis, 2004a, p. 293]. In their analysis of emphasis on pro forma
earnings in press releases, Bowen et al. [2005, p. 1012, footnote 2] distinguish between opportunistic
and ritualistic managerial behavior.
6
8. Table 1
Competing schools of thought on discretionary disclosure strategies in corporate narrative documents
Aspect Impression management school Incremental information school
Jurisdiction Predominantly non-US Predominantly US
Market efficiency Weak1 Semi-strong/strong
Theory Preparers → Agency theory: Opportunistic Preparers → Agency theory: Information
perspective perspective
Users → Behavioral finance theories Users → Expected utility theory
Interpretation of discretionary disclosure strategies Impression management Value-relevant incremental information
Explanation of discretionary disclosure practices Exploitation of information asymmetries to manage Overcoming information asymmetries and
users’ perceptions increasing information usefulness
Manager incentives Biased reporting leads to increased share Unbiased reporting leads to improved managerial
performance (in the short term) resulting in reputation, lower cost of capital and increased
increased managerial compensation managerial compensation2
Consequences Short-term capital misallocations Improved capital allocations
Behavior of market participants Preparers → Rational Preparers → Rational
Users → Irrational/bounded rational Users → Rational
Tests Preparer behavior → Preparer behavior →
• Association between discretionary disclosure • Association between discretionary disclosure
strategies and concurrent negative financial strategies and negative future financial
performance/negative earnings surprises performance
User behavior → User behavior →
• Share price reactions to discretionary disclosure • Share price reactions to discretionary disclosure
strategies strategies
• Behavioral responses to discretionary disclosure • Behavioral responses to discretionary disclosure
strategies strategies
1
An alternative explanation is that preparers believe that users are persuaded by impression management strategies. In this case, reporting bias constitutes “an
irritating inefficiency in the financial system, which professional investors long ago learned how to tune out” [Warner, 2004, p. 27].
2
Preparers have no incentives to engage in impression management since users are capable of seeing through the bias. If there is bias, this would leads to higher
cost of capital, reduced share performance, and thus reduced managerial compensation.
7
9. The different views of market efficiency underlying the two schools of thought
summarized in Table 1 are reflected in Table 2 which categorizes prior research
according to the taxonomies we have adopted in this paper: the two schools of
thought, the preparer and user perspective, and the seven discretionary disclosure
strategies identified by previous research. The main concern of the impression
management school is determining whether and under which circumstances firms
engage in impression management. Thus, the majority of such studies are from the
preparer perspective. They mainly examine the association of various impression
management strategies with a range of firm characteristics, primarily concurrent
negative financial performance. By contrast, the incremental information school
presumes that discretionary disclosure strategies constitute incremental information.
Their main concern is investigating whether and to what extent investors perceive
them as value relevant. Thus, the majority of studies from the incremental information
school are from the user perspective.
3.0 PREPARER PERSPECTIVE
Impression management research from a preparer perspective employs a wide
range of content analysis techniques to investigate whether and how managers use
corporate narrative documents for impression management purposes and what factors
might influence this behavior. Specifically, impression management studies focusing
on corporate annual reports are based on the implicit assumption of an incongruity
between the information in the narrative sections and the financial accounts. If
preparers have not engaged in impression management, narrative discretionary
disclosures should be consistent with the information in the financial statements. If
inconsistency is found, preparers are likely to have used the narrative statements to
influence the perceptions and decisions of users.
3.1 Theoretical frameworks
Five theories have provided the theoretical underpinning for research focusing
on the preparer. These are agency theory; signaling theory; legitimacy theory;
stakeholder theory; and institutional theory. We first describe each of the theories,
followed by a discussion of their differences. We then present empirical evidence.
8
10. 3.1.1 Agency theory
Agency theory dominates this field of research. Both competing schools of
thought (impression management and incremental information) use assumptions
rooted in agency theory [Baiman, 1990]. The incremental information school
presumes that managers provide discretionary narrative information to overcome
information asymmetries between firm insiders and outsiders to lower the cost of
capital, thereby enhancing share performance, and thus increasing managerial
compensation [Baginski et al., 2000].
By contrast, the impression management school explains managerial
discretionary disclosure strategies as opportunistic and regards information provided
by management as driven by self-interest [Abrahamson and Park, 1994]; [Courtis,
1995, 2004a, 2004b]; [Hooghiemstra, 2000, 2001]; [Godfrey et al., 2003];
[Rutherford, 2003]; [Smith and Taffler, 1992a, 2000]; [Aerts, 2005]; [Li, 2006]. As
negative organizational outcomes give rise to conflicts of interest between managers
and shareholders, managers are prompted to manipulate outsiders’ perceptions of and
decisions on financial performance and prospects (i.e. to engage in impression
management) [Aerts, 2005]. This opportunistic managerial behavior has given rise to
the so-called obfuscation hypothesis [Courtis, 1998], which assumes that managers
are not neutral in presenting accounting narratives [Sydserff and Weetman, 1999].
Managers tend to obfuscate failures and emphasize successes [Adelberg, 1979].
3.1.2 Signaling theory
Smith and Taffler [1992a] and Rutherford [2003] use signaling theory in the
context of the obfuscation hypothesis. Whereas agency theory focuses on poorly
performing firms, signaling theory focuses on the behavior of managers in well-
performing firms who signal this superiority by greater transparency in their
disclosure and presentation of information.
3.1.3 Legitimacy theory
Legitimacy theory has also been invoked to explain corporate reporting
practices. Within legitimacy theory, disclosures (particularly social and environmental
disclosures) are hypothesized to alter perceptions about the legitimacy of the
organization. For example, corporate social disclosures are regarded as a response to
9
11. public pressure and increased media attention [Hooghiemstra, 2000]. Underlying
legitimacy theory is the notion of the firm engaging in a social contract with society.
Consequently, survival is dependent to some extent on operating within the
boundaries of societal norms. Impression management has been applied as an
explanatory framework to analyze the reactions of firms facing legitimacy threats.
Hooghiemstra [2000] uses an impression management approach to investigate Shell’s
handling of public controversy when in 1995 it announced its plans to sink the Brent
Spar in the Atlantic. Ogden and Clarke [2005] apply legitimacy theory to the
corporate communication practices of recently privatized water companies, focusing
on customers rather than investors as the users of annual reports. Newly privatized
entities are expected to be more competitive and customer focused than the precursor
monopoly bodies.
3.1.4 Stakeholder theory
Stakeholder theory is similar to legitimacy theory in that it regards firms’
corporate reporting as a response to the demands and expectations of various
stakeholders, such as employees, customers, government agencies, lobby groups, etc.
Firms are assumed to engage in impression management to manipulate the
perceptions of a particular stakeholder group. Hooghiemstra [2000] shows how Shell,
after abandoning its plans to sink the Brent Spar in the Atlantic, engaged in a dialogue
with its key stakeholder groups to change their perceptions.
3.1.5 Institutional theory
Institutional theory assumes that firms will conform to institutional
expectations by adopting institutional norms. By adopting such norms, firms reduce
inspection by internal and external constituents. Managers are assumed to respond to
institutional pressures in their corporate reports. Bansal and Clelland [2004] apply
institutional theory to the disclosure of environmental liabilities and expressions of
commitment to the environment. They find that by adopting impression management
tactics firms gain legitimacy which, in turn, lowers their unsystematic stock risk.
3.1.6 Differences in the five theories
Five aspects distinguish the above theories: differing managerial incentives,
audiences, concepts of performance, contexts, and research designs/methodologies.
10
12. Managerial incentives differ depending on whether managers are assumed to act
opportunistically or to provide information-relevant discretionary disclosures. In the
case of both agency theory and signaling theory, investors are the audience for
disclosures, whereas legitimacy theory, stakeholder theory, and institutional theory
take society/stakeholders as the audience for disclosures. Agency theory and signaling
theory focus on financial performance, whereas legitimacy theory, stakeholder theory,
and institutional theory focus more on social and environmental performance. Studies
adopting agency and signaling theory also focus on impression management as an
every-day occurrence, whereas studies from a legitimacy theory, stakeholder theory,
or institutional theory perspective study the use of impression management in a non-
routine reporting context, such as privatization or pollution. Finally, an agency or
signaling theory perspective tends to result in large sample sizes and a positive
methodology involving quantitative content analysis, hypothesis testing, and
statistical association tests, a legitimacy theory, institutional theory, and stakeholder
theory perspective tends to involve more in-depth investigations of specific events
that might have given rise to impression management, by means of case studies and
qualitative content analysis.
3.2 Impression management strategies and empirical findings
Due to the predominance of agency theory explanations of managerial
behavior, prior research has almost exclusively focused on one aspect of impression
management, namely the manipulation of outsiders’ perceptions of firm performance.
Most studies regarded impression management as a response to negative
organizational outcomes.
3.2.1 Preparer motives
Managers are presumed to engage in one of two types of behavior: (1)
concealment or (2) attribution – a defensive framing tactic that shifts the blame for
negative outcomes away from themselves. Concealment can be achieved in two ways:
by either (1a) obfuscating negative outcomes (bad news) or (1b) emphasizing positive
organizational outcomes (“good news”). Research analyzing positive bias presumes
that “sections of the [annual] reports are allegedly managed so as to present
management in as favorable a light as possible” [Stanton et al., 2004, p. 57].
11
13. Attribution is an impression management strategy borrowed from social
psychology [Heider, 1958]; [Jones and Davis, 1965]; [Kelley, 1967]. It is a self-
serving bias involving individuals’ perceptions and explanations of events that
manifests itself in a tendency to claim more responsibility for successes than for
failures. In a financial reporting context it entails managers attributing positive
organizational outcomes to internal factors (“entitlements”) and negative
organizational outcomes to external factors (“excuses”).
Clatworthy and Jones [2006, p. 506] observe that it is not clear “whether this
impression management is conscious or unconscious.” The prior literature is generally
not explicit about whether impression management is executed on a conscious or sub-
conscious level, although it is clear that most studies implicitly assume conscious
behavior.
Agency theory explains impression management as reporting bias introduced
by the opportunistic behavior of managers who select a style of presentation and
choice of content that is beneficial to them. This assumes a conscious and deliberate
managerial disclosure strategy [Bowen et al., 2005].
This confusion can be partly attributed to prior studies drawing from both
agency theory and the social psychology literature. Unlike concealment, self-serving
bias (in the form of performance attributions) constitutes a distortion that is – at least
partly – unconscious of the way humans perceive reality. The social psychology
literature regards impression management as “the conscious or unconscious attempt to
control images that are real or imagined in social interactions” [Schlenker, 1980, p. 6].
Staw et al. [1983] and Abrahamson and Park [1994] test whether impression
management strategies are executed deliberately and consciously by investigating
whether they are associated with subsequent selling of shares by management. If
impression management strategies are used intentionally to increase the firm’s share
price, managers will also tend to sell their shares in the short term to avoid a loss
when information about the firm’s financial problems becomes public. Both studies
find evidence for this opportunistic managerial behavior. This suggests that
impression management strategies are executed intentionally and consciously.
3.2.2 Overview of the seven impression management strategies
As shown in Figure 1, preparer motives can be classified into concealment and
attribution. Figure 1 also the types of information affected by impression management
12
14. (verbal/numerical), the types of manipulation (presentation/disclosure of information),
and the seven impression management strategies examined in prior accounting
research. Additionally, Figure 1 identifies the focus of manipulation and the focus of
content analysis for each of the seven impression management strategies.
Six strategies are used for concealment. Two of these obfuscate bad news by
manipulating verbal information either by (i) reading ease manipulation (i.e. making
text more difficult to read) or (ii) rhetorical manipulation (i.e. using persuasive
language). Four strategies emphasize good news by manipulating verbal and/or
numerical information: (iii) thematic manipulation emphasizes positive words and
themes, or emphasizes positive financial performance; (iv) visual and structural
manipulation involves the way in which information is presented (i.e. visual emphasis
or ordering of verbal/numerical information); (v) performance comparisons involve
choosing benchmarks that portray current financial performance in the best possible
light; and (vi) choice of earnings number involves selecting one of a number of
earnings amounts for disclosure to favorably portray current financial performance.
The seventh impression management strategy is the attribution of
organizational outcomes.
13
15. Figure 1
Managerial impression management strategies in corporate narrative documents
Managerial
self-serving motives
Managerial
impression 1. Concealment 2. Attribution
management
behavior
1a. Obfuscation of 1b. Emphasis on good
bad news news
Type of
information Verbal information Verbal information Numerical Verbal
information information
Type of
manipulation Manipulation of Manipulation of Manipulation of Manipulation of Manipulation of
presentation of disclosure of presentation of disclosure of disclosure of
information information information information information
Impression (i) Reading ease (ii) Rhetorical (iii) Thematic (iv) Visual and (v) Performance (vi) Choice of (vii) Attribution
management manipulation manipulation manipulation structural comparisons earnings number of performance
strategies manipulation
Focus of Reading difficulty Persuasive Bias of themes Presentation and Bias of numerical Selectivity of Internal versus
manipulation language location of disclosures disclosures numerical external
disclosures attributions
Focus of Syntactical features Rhetorical Positive/negative Use of font styles, Comparison of Earnings Performance
analysis features key words order effects performance number attributions
14
16. As indicated by Figure 1, the seven impression management strategies are
carried out by (i) disclosure choices and/or (ii) the presentation of information by
means of (a) bias and (b) selectivity. Bias entails conveying information in a very
positive light (or occasionally in a very negative light), and selectivity involves
omitting or including certain items of information.
Table 2 classifies prior research according to the three taxonomies adopted in
this paper (i.e. the two competing schools of thought, the preparer/user perspective
and the seven impression management strategies. Eight studies view discretionary
disclosure strategies in the light of both impression management and incremental
information: [Lang and Lundholm, 2000]; [Frederickson and Miller, 2004]; [Barton
and Mercer, 2005]; [Bowen et al., 2005]; [Johnson and Schwartz, 2005]; [Krische,
2005]; [Elliott, 2006]; [Matsumoto et al., 2006].
Seven studies take both a preparer and user perspective: [Abrahamson and
Amir, 1996]; [Schrand and Walther 2000]; [Lang and Lundholm, 2000]; [Bowen et
al., 2005]; [Johnson and Schwartz 2005]; [Matsumoto et al., 2006]; [Davis et al.,
2007]. These seven papers are classified as user studies in Table 2, even though they
take both a user and preparer perspective.
15
17. Table 2
Taxonomies: Impression management/incremental information; Preparer/user perspectives; Seven impression management strategies
(i) Reading ease (ii) Rhetorical (iii) Thematic (iv) Visual and structural (v) Performance (vi) Choice of earnings (2) Attribution of
manipulation manipulation manipulation effects comparisons number organizational outcomes
(see Table 3) (see Table 4) (see Table 5) (see Table 6) (see Table 7) (see Table 8) (see Table 9)
Panel A –Impression management – preparer perspective
• Adelberg [1979] • Thomas [1997] • Abrahamson and Park • Courtis [1996] • Lewellen et al [1996] • Guillamon-Saorin • Aerts [1994]
[1994] [2006]
• Parker [1982] • Jameson [2000] • Smith and Taffler [2000] • Guillamon-Saorin • Cassar [2001] • Hooghiemstra [2001]
[2006]
• Lewis et al. [1986] • Sydserff and Weetman • Clatworthy and Jones • Short and Palmer • Aerts [2001]
[2002]3 [2003]2 [2003]
• Courtis [1986] • Yuthas et al. [2002] • Rutherford [2005] • Guillamon-Saorin • Clatworthy and Jones
[2006] [2003]2
• Jones [1988] • Guillamon-Saorin [2006] • Aerts [2005]
• Baker and Kare [1992] • Ogden and Clarke
[2005]
• Smith and Taffler [1992a]
• Smith and Taffler [1992b]
• Subramanian et al. [1993]
• Courtis [1995]
• Courtis [1998]
• Sydserff and Weetman [1999]
• Clatworthy and Jones [2001]
• Sydserff and Weetman [2002]1
• Rutherford [2003]
• Courtis [2004a]
• Li [2006]
• Merkl-Davies [2007]
16
18. Table 2
Taxonomies: Impression management/incremental information; Preparer/user perspectives; Seven impression management strategies
(i) Reading ease (ii) Rhetorical (iii) Thematic (iv) Visual and structural (v) Performance (vi) Choice of earnings (2) Attribution of
manipulation manipulation manipulation effects (see comparisons number organizational outcomes
(see Table 3) (see Table 4) (see Table 5) Table 6) (see Table 7) (see Table 8) (see Table 9)
Panel B –Incremental information – preparer perspective
• Abrahamson and Amir [1996] 3,6
Panel C – Impression management - user perspective
• Lang and Lundholm • Staw et al. [1983]3,6 • Schrand and Walther • Staw et al. [1983]3
[2000]3,5, 6 [2000]3, 6
• Henry [2006b]3 • Baird and Zelin [2000]4 • Lee et al. [2004]3
• Matsumoto et al • Courtis [2004b]4
[2006]3,5,6
• Kelton [2006]4
Panel D – Incremental information - user perspective
• Davis et al. [2007]3,6 • Bowen et al. [2005] 3,5, 6 • Krische [2005]4,5 • Frederickson and • Baginski et al. [2000]3
Miller [2004]4,5
• Henry [2006a] 3 • Elliot [2006] 4,5 • Johnson and Schwartz • Baginski et al. [2004]3
[2005]3,4,5
• Bowen et al [2005]3 • Barton and Mercer
[2005]3,5
1
Sydserff and Weetman [2002] is difficult to classify as it uses three methodologies: one reading ease manipulation and two rhetorical manipulation.
2
Clatworthy and Jones [2003] test for the association between (i) positive/negative organizational outcomes and (ii) the attribution of positive/negative organizational outcomes to internal/external
factors and increasing/declining performance.
3
Share price reaction study
4
Experiment
5
These studies distinguish between the two competing schools: impression management and incremental information
6
These studies take both a preparer and user perspective
17
19. 3.2.3 Readability/reading ease manipulation
Table 3 summarizes impression management studies that focus on
readability/reading ease manipulation. These studies regard reading difficulty as a
proxy for obfuscation, with obfuscation being defined as “a narrative writing
technique that obscures the intended message, or confuses, distracts or perplexes
readers, leaving them bewildered or muddled” [Courtis, 2004a, p. 292]. They are
based on the presumption that “preparers manipulate transparency by reducing clarity
when they wish to disclose less about their underlying circumstances” [Rutherford,
2003, p. 189]. Studies investigate whether managers manipulate outside parties’
perceptions of firm performance by rendering corporate narrative documents difficult
to read. Syntactical complexity makes texts more difficult to read and this is regarded
as a proxy for obfuscation. There is a limit to the extent to which readability can be
manipulated as text must be sufficiently readable so that the impression one wants to
manage is actually managed. On the other hand, it may be that managers’ intent is to
leave readers confused and to put them off probing further.
Reading difficulty is attributed to two factors: (1) managerial manipulation
[Courtis, 1998, 2004a]; [Sydserff and Weetman, 1999]; [Clatworthy and Jones, 2001];
[Li, 2006] and (2) bad writing [Baker and Kare, 1992]; [Courtis, 1995]. Courtis [1995,
p. 4] questions “whether writing which is difficult to read is executed deliberately to
mask some unfavourable aspect of corporate behavior, or is performed unwittingly
out of ignorance.” Whereas the former represents a deliberate effort by managers to
mislead users and thus constitutes impression management, the latter is due to lack of
skill on the part of the writer. In practice, however, it is not easy to differentiate
between the two.
Lack of skill is a less likely explanation. Corporate narrative documents of
listed firms are probably written by professional writers. Considering the adverse
effect of a badly executed annual report in terms of money and reputation, firms are
likely to spend time and care ensuring that their communications are exact. Often
professional outside agencies are employed to write narrative report sections that
convey the right message.
18
20. Table 3
Summary of reading ease manipulation studies
Study Country Sample Narrative Readability measure Independent Results
size sections variables
Adelberg [1979] US 16 Footnotes, Cloze Firm performance Standard footnotes and management’s review
Management of operations are difficult to read; Profitability
review of is inversely related to the reading difficulty of
operations, non-standard footnotes and of auditors’ reports.
Auditors’
reports
Parker [1982] Australia 10 Chairman’s/ Fog None Narratives are of low readability.
directors' review
of operations
Lewis et al. Australia 9 Managing Fog, Flesch, Kwolek, None Narratives are of low readability.
[1986] director’s report, Dale-Chall, Lix, Fry
Operations
review
Courtis [1986] Canada 142 Chairman’s Fog, Flesch Firm performance, Poor quality readability is not related to poor
address, Corporate risk performance or high risk.
Financial
statement
footnotes
Jones [1988] UK 1 Chairman’s Flesch Firm performance, Readability declines as turnover (proxy for firm
report Time, Firm size, size/corporate complexity) increases, over time
Listing status, and when the company become listed.
Title of chairman's
narrative,
Chairman
Baker and Kare US 44 President’s Flesch Firm performance, Presidents’ letters of larger firms are more
[1992] letter Firm size, readable. The association between readability
and profitability is inconclusive.
Smith and UK 66 Chairman’s Flesch, Lix, Cloze Firm survival Readability and understandability measure
Taffler [1992a] report different concepts; Understandability is a
function of the sophistication of the target
audience.
19
21. Table 3
Summary of reading ease manipulation studies
Study Country Sample Narrative Readability measure Independent Results
size sections variables
Smith and UK 66 Chairman’s Flesch, Lix, Cloze Firm survival There is no difference in readability
Taffler [1992b] report between failed and non-failed firms.
Subramanian et US 60 Letter to Fog, Flesch Firm performance Annual reports of good performers are
al. [1993] stockholders more readable.
Courtis [1995] Hong 32 Chairman’s Fog, Flesch, Lix Firm performance, No significant difference is found
Kong report, Firm size, between readability and independent
Footnotes to the Industry variables.
accounts
Courtis [1998] Hong 120 Chairman’s Flesch Firm performance, Narratives of firms with high press
Kong report Press coverage coverage are significantly less
readable.
Sydserff and UK 10 Operating and Flesch, Texture index None Texture index captures factors not
Weetman [1999] financial review captured by readability formulas.
Clatworthy and UK 120 Chairman’s Flesch Firm performance Variability of readability is not
Jones [2001] report explained by performance. Thematic
structure is a key driver of variability
of readability.
Sydserff and UK 27 Chairman’s Flesch, Transitivity index, Firm performance Transitivity index and DICTION are
Weetman [2002] report DICTION useful alternatives to readability
formulas.
20
22. Table 3
Summary of reading ease manipulation studies
Study Country Sample Narrative Readability measure Independent Results
size sections variables
Rutherford UK 64 Operating and Flesch Firm performance, Poorly performing firms do not
[2003] financial review Firm size, obfuscate using textual complexity.
Corporate risk, Readability is not associated with any
Organizational other variables.
complexity,
Statutory regulation
Courtis [2004a] Hong 60 Annual reports, Flesch Firm performance, Low reading ease, and high
Kong Interim reports, Corporate age, readability variability, are associated
Prospectuses Corporate with bad news.
complexity
Li [2006] US 55,719 10-K statements Fog, Length Firm size, Market to Annual reports of firms with lower
firm book ratio, Firm earnings are harder to read. Positive
years age, Special items, earnings of easier-to-read annual
Volatility, Firm reports are more persistent.
complexity,
Financial
complexity, Firm
events, Regulatory
environment
Merkl-Davies UK 93 Chairman’s Flesch, Flesch Kincaid, Good/bad news, Chairmans’ reports of large firms are
[2007] report Various cohesion Firm size, less cohesive and thus more difficult
measures Industry to read than those of small firms.
21
23. Readability studies can be grouped into four categories: (1) reading difficulty of
annual report narratives [Parker, 1982]; [Lewis et al., 1986]; [Courtis, 1986]; [Jones,
1988]; (2) variability of readability of different narrative sections of annual reports
[Courtis, 1998]; [Clatworthy and Jones, 2001]; [Courtis, 2004a], (3) association between
the reading difficulty of annual report narratives and various firm characteristics, most
commonly firm performance (see “Independent variables” column in Table 3), and (4)
studies focusing on methodological development [Stevens et al., 1992]; [Smith and
Taffler, 1992b]; [Jones, 1997]; [Sydserff and Weetman, 1999, 2002].
Studies generally find annual report narratives to be difficult to read [Lewis et al.,
1986]; [Courtis, 1986]; [Courtis, 2004a]; [Smith and Taffler, 1992b]. Research indicates
that “even users of the greatest sophistication have difficulty in fully comprehending
financial narratives” [Smith and Taffler, 1992b, p. 94]. In a single firm case study, Jones
[1988] finds readability to decrease over time, which goes hand in hand with sales growth
(sales being a proxy for organizational complexity), and when the firm going public.
Findings of studies based on the obfuscation hypothesis which presumes that
managers have a “tendency to manipulate or arrange prose to…mask ‘bad news’
[negative organizational outcomes] with more difficult writing” [Courtis, 1998, p. 461]
are mixed. Adelberg [1979]; Subramanian et al. [1993]; Courtis [1998, 2004a]; Li [2006]
find reading difficulty and firm financial performance to be inversely related, whereas
Courtis [1986, 1995]; Baker and Kare [1992]; Smith and Taffler [1992a]; Clatworthy and
Jones [2001]; Rutherford [2003] find no such relation. Merkl-Davies [2007] finds firm
size, but not financial performance, to be the determining factor in reading difficulty.
Although her main effects model shows negative financial performance to be directly
related to reading difficulty, this association is no longer significant when financial
performance is interacted with firm size.
3.2.4 Rhetorical manipulation
Research focusing on rhetorical manipulation regards persuasive language as a
proxy for obfuscation. It assumes that managers conceal negative organizational
outcomes using rhetorical devices, such as pronouns and the passive voice. This strand of
impression management research does not focus on “what firms say,” but rather on “how
they say it” [Pennebaker et al., 2003, p. 571].
22
24. Table 4
Summary of rhetorical manipulation content analysis studies
Study Country Sample Narrative Content analysis Independent Results
size sections technique variables
Thomas [1997] US 1 Manager's Passive constructions, Firm performance Negative news is factual, objective
message to Sentence openers, and not attributable to individuals
stockholders Relationship between first thought to be responsible.
and last paragraph,
Euphemisms
Jameson [2000] US 200 Entire annual Multiple voices, Firm performance Uses complex linguistic analysis to
report Embedded genres, show how mixed-return, compared
Contrasting focal points with top-return, funds are explained.
Sydserff and UK 27 Chairman’s Transitivity index, Firm performance Transitivity index balances but does
Weetman report DICTION not supplant use of readability scores.
[2002]
Yuthas et al. US 14 President’s Comprehensibility, Truth, Firm performance Positive and negative performers are
[2002] letter and Legitimacy, Sincerity, more communicative.
Management DICTION
Discussion &
Analysis
23
25. Findings of research based on this impression management strategy are also
mixed. Thomas [1997] concludes that managers’ messages to stockholders differ between
profitable and unprofitable years. She finds negative organizational outcomes associated
with rhetorical devices aimed at blaming performance on circumstances outside
managers’ control. Her overall conclusion is that “managers’ letters suggest and imply,
but they do not lie” [p. 63]. In other words, it is possible to read between the lines.
Jameson [2000] finds shareholders’ reports of mixed-return mutual funds to be
significantly less direct than those of top-performing mutual funds. However, the relative
indirectness of reports on mixed-return funds compared with top-return funds could be
interpreted not as impression management, but as the increased complexity of the subject.
This is similar to the argument that larger firms have more complex operations that lead
to increased reading difficulty.
Sydserff and Weetman [2002] examine the association between verbal tone and
financial performance. They find some limited evidence of impression management, but
they conclude that management is even-handed in presenting narrative information.
Yuthas et al. [2002] find that firms with positive and negative earnings surprises
exhibit a higher level of rhetorical features associated with Habermas’ principles of
communicative action (i.e. suggesting clarity, truthfulness, sincerity, and legitimacy) than
firms without earnings surprises. This seems to suggest that managers of firms with
earnings surprises use the narrative sections not for impression management purposes,
but to emphasize their honesty and trustworthiness.
3.2.5 Thematic manipulation
Studies focusing on thematic manipulation, summarized in Table 5, assume that
managers conceal bad news by not reporting it, or by not reporting it to the same extent
as good news. This phenomenon is referred to as the “Pollyanna principle” (Pollyanna
being an eternal optimist) [Hildebrandt and Snyder, 1981]. Managers are assumed to
present themselves and financial performance in the best possible light; this manifests
itself in the prevalence of positive rather than negative words/themes. However,
Abrahamson and Amir [1996]; Henry [2006a]; Davis et al. [2007] regard the use of
words with positive or negative connotations not as an impression management strategy,
but as a means of overcoming information asymmetries by providing users with
incremental information about expected future performance.
24
26. Table 5
Summary of thematic content analysis studies
Study Country Sample Narrative Content analysis Independent Results
size sections technique variables
Impression management – Preparer perspective
Abrahamson US 1,118 President’s Positive/negative keywords Firm performance Outside directors, large institutional
and Park [1994] letter to measures, investors and accountants limit
shareholders Various corporate concealment of negative organizational
governance variables outcomes.
Smith and UK 66 Chairman’s Positive/negative keywords Firm survival Firms’ discretionary narrative
Taffler [2000] report disclosures are closely associated with
financial performance.
Clatworthy and UK 100 Chairman’s Positive/negative keywords Firm performance No evidence is found of biased themes
Jones [2003] report depending on financial performance.
Rutherford UK 44 Operating and Frequencies of 90 key words Firm performance, Language is biased toward the positive.
[2005] financial review Gearing
Guillamon- UK and 172 Press release Positive/negative keywords Firm size, Firms use more positive key words than
Saorin [2006] Spain Firm performance, negative key words, even controlling for
Nationality, performance, indicating biased
Industry reporting.
Incremental information – Preparer perspective
Abrahamson US 1,355 President’s Positive/negative keywords Firm size, Firm Information in presidents’ letters is
and Amir letter to performance consistent with financial information.
[1996] shareholders measures, Information in presidents’ letters is used
Equity returns by investors to assess the quality of
earnings.
25
27. Table 5
Summary of thematic content analysis studies
Study Country Sample Narrative Content analysis Independent Results
size sections technique variables
Impression management – User perspective
Lang and US 41+ 41 Disclosure Type of statements Equity offering/non- Disclosure increases prior to equity
Lundholm documents (performance, management offering firms offerings. Tone is predominantly
[2000] spin, forward-looking, optimistic.
other), Tone of disclosures
(optimistic, neutral,
pessimistic)
Henry [2006b] US 1,366 Press releases Tone (positive/negative Abnormal share Tone of earnings press releases
keywords - DICTION), price returns influence investors’ reactions.
Length of press release,
Textual complexity,
Numerical intensity
Matsumoto et US 8,867 Conference call Manager optimism, Firm performance Managers are more optimistic if results
al. [2006] firm transcripts Analyst skepticism are good, but analysts are more skeptical
quarters in such situations. Analysts are skeptical
of forward-looking statements. Analysts
can detect false optimism by managers.
Market reaction is consistent with
analyst skepticism.
Incremental information – User perspective
Davis et al. US 23,400 Press releases Optimistic/pessimistic Future performance, Positive (negative) association between
[2007] language, Size, Industry, Year positive (negative) language and future
DICTION performance.
Henry [2006a] US 441 Press releases Keywords, Market reaction The market reacts to verbal information.
Length, Inclusion of verbal information
Complexity, improves the predictive accuracy of
Numerical Intensity, market returns beyond inclusion of
Tone financial information.
26
28. Some studies find that firms tend to emphasize positive organizational
outcomes, regardless of their financial performance [Smith and Taffler, 2000];
[Rutherford, 2005]; [Guillamon-Saorin, 2006]. Others find no evidence of biased
themes depending on financial performance [Abrahamson and Park, 1994];
[Abrahamson and Amir, 1996]; [Clatworthy and Jones, 2003]; [Davis et al., 2007];
[Matsumoto et al., 2006]. However, managerial positive bias is only an indicator of
future firm performance if it is confirmed by analyst opinion [Matsumoto et al.,
2006]. In the context of conference calls, Matsumoto et al. [2006] distinguish between
managerial optimism as impression management/incremental information on the basis
of whether it is confirmed by analyst opinion. They find managerial optimism
regarding future financial performance is not confirmed by analyst opinion and also is
not reflected in future financial performance which suggests that it constitutes positive
bias rather than incremental information.
Lang and Lundholm [2000] investigate positive bias in a different context of
new equity public offerings. They categorize narrative disclosures before new equity
public offerings into three broad categories: (i) performance-related disclosures, (ii)
management spin, and (iii) forward-looking items. Management spin (i.e. impression
management) is measured in two ways: (a) significant additional detail concerning
performance, and (b) management quotes expanding on performance results. In
addition, they take 15 different types of statement and classify these into optimistic,
pessimistic, and neutral. They find that the absolute and relative frequency of
optimistic disclosures increases dramatically before equity public offerings, whereas
pessimistic disclosures decrease slightly. After the offering the mix of “tones”
becomes more neutral. This suggests that managers engage in impression
management before equity offerings to increase the firm’s share price.
3.2.6 Visual and structural manipulation
Perceptions of firm performance and prospects can also be manipulated by the
way information is presented in corporate documents. Four different types of
emphasis can be applied: (1) Repetition occurs when an item is repeated more than
once [Courtis, 1996]; [Guillamon-Saorin, 2006]. Courtis [1996] suggests that
repetition of information can enhance the understandability of financial reports or can
add noise to the reporting process, whereas Guillamon-Saorin [2006] assumes
repetition is used for impression management purposes; (2) Reinforcement occurs
27
29. when a piece of information is emphasized by using a qualifier [Guillamon-Saorin,
2006]; (3) Visual emphasis occurs when firms use a number of visual effects to make
a piece of information more obvious to readers (for example, emphasis by
highlighting, font style and size, bullet points, bold text, color, etc.) [Courtis, 2004b];
[Guillamon-Saorin, 2006]; (4) Ordering or physical location of information is used to
direct readers’ attention to or away from specific items of information [Staw et
al.,1983]; [Baird and Zelin, 2000]; [Bowen et al., 2005]; [Elliott, 2006]; [Guillamon-
Saorin, 2006]; [Kelton, 2006]. Table 6 summarizes this research.
28
30. Table 6
Summary of visual and structural manipulation
Study Country Sample Narrative Content analysis Independent Results
size sections technique variables
Impression management – Preparer perspective
Courtis [1996] Hong Kong 145 Annual reports Redundancy – Firm size, There is no persuasive evidence that
repetition of Profitability, redundant voluntary disclosure is a problem
voluntary information Risk, in annual reports.
Industry
Guillamon- UK and Spain 172 Press release Repetition, Firm size, Good news is repeated, reinforced, and
Saorin [2006] Reinforcement, Firm performance, emphasized more, even controlling for
Visual emphasis Nationality, performance, indicating biased reporting.
Industry
Impression management – User perspective
Staw et. al. US 81 Letter to Performance Change in stock Impression management is effective in that
[1983] shareholders explanations price, Institutional self-serving attributions are associated with
ownership, Age of improvements in stock price.
CEO, Tenure of
CEO, Salary of CEO
Baird and US 92 MBA Hypothetical Ordering of good --- Subjects are more influenced by information
Zelin [2000] students president’s letter news/bad news read first in presidents’ letters.
Courtis Hong Kong 100 Annual reports Use of color, Change in Unclear association between change in color
[2004b] Change in color profitability and change in profitability; Color influences
perception formation and investor judgments.
Kelton [2006] US 59 MBA Web-based Presentation format, --- Results suggest that presentation format
students financial Information type affects nonprofessional investors’
disclosures information processing and decision
outcome for certain decisions but does not
affect information acquisition. Participants
using electronic financial information were
significantly less accurate than those using
paper-based information.
29
31. Table 6
Summary of visual and structural manipulation
Study Country Sample Narrative Content analysis Independent Results
size sections technique variables
Incremental information – User perspective
Bowen et al. US 206 firms, Earnings press Emphasis/positioning Value relevance, Firms emphasize metrics that are more
[2005] 1,188 firm releases of pro forma earnings Firm performance, value relevant and that portray more
quarters Media coverage, favorable firm performance.
Level of scrutiny
from regulator
Elliott [2006] US 89 MBA Earnings press Emphasis/positioning --- The location of pro forma earnings, and
students releases of pro forma earnings not just their disclosure, influences
and 55 investor perceptions and investment
analysts decisions.
30
32. Courtis [2004b] finds no difference in the use of color between profitable and
unprofitable firms. However, Bowen et al. [2005] find that firms with low value
relevance of earnings and greater media exposure place less emphasis on generally
accepted accounting principles (GAAP) earnings and greater relative emphasis on pro
forma earnings (i.e. they visually direct readers’ attention to the earnings number that
shows financial performance in the best possible light). Guillamon-Saorin [2006]
finds that firms emphasize positive rather than negative information and that positive
information tends to be more prominently placed than negative information.
3.2.7 Performance comparisons
Bias also manifests itself in numerical disclosures. This stream of research
(summarized in Table 7) is based on the assumption that firms introduce positive bias
by choosing performance comparisons that enable them to portray their current
performance in the best possible light. Two types of performance comparisons have
been studied: (1) benchmark earnings number (choosing the lowest prior-period
comparative benchmark earnings number in order to report the highest year-on-year
increase in earnings) and (2) performance referents (comparing performance
indicators against reference points, either time-series (past performance) or cross-
sectional (industry averages and competitors).
31
33. Table 7
Summary of performance comparisons studies
Study Country Sample Narrative Content analysis Independent Results
size sections technique variables
Impression management – Preparer perspective
Lewellen et al. US 772 Corporate proxy Common stock Firm size, Evidence is found of a downward bias in stock
[1996] statements return performance Blockholders, return benchmarks, resulting in a bias in the
comparisons Share ownership by comparison, indicating that managers engage in
highest paid self-serving behavior.
executive, Rate of
return of common
stock
Cassar [2001] Australian 484/392 Annual reports Disclosure of share Comparison share Better performing firms are more likely to disclose
(1/5 years) performance graphs price performance, share performance graphs. This selectivity, together
Firm size with choice of comparisons in graphs, resulted in
87% of firms performing better than disclosed
comparisons.
Short and Palmer US 119 President’s letter Performance Firm size, CEOs of large, highly performing and young
[2003] referents Firm performance, companies use more external performance referents
Corporate age than CEOs from small, poorly performing and
established firms.
Guillamon-Saorin UK and 172 Press release Prior-period and Firm size, Benchmarks exaggerate good news, indicating
[2006] Spain other benchmarks Firm performance, biased reporting.
Nationality,
Industry
Impression management – User perspective
Schrand and US 130 Quarterly Prior-period earnings Share price Managers select prior-period benchmarks that
Walther [2000] earnings benchmarks reaction result in the greatest increase in earnings. Investors
announcements use benchmarks to evaluate earnings.
Incremental information – User perspective
Krische [2005] US 104 Earnings Prior-period earnings --- Quantitative description of prior-period gain or loss
students announcements benchmarks in current year earnings announcements helps
investors evaluate firm performance.
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34. The selective use of a benchmark, to highlight positive changes in earnings,
has been investigated by Lewellen et al. [1996]; Schrand and Walther [2000]; Cassar
[2001]. Lewellen et al. [1996] find that share price performance benchmarks disclosed
in corporate proxy statements are biased downwards; this has the effect of allowing
managers to overstate relative share return performance. Schrand and Walther [2000]
find that managers are more likely to select the lowest prior-period comparative
benchmark earnings number that enables them to report the highest year-on-year
increase in earnings. Cassar [2001] finds that better performing firms are more likely
to voluntarily disclose share performance graphs in their annual reports. Guillamon-
Saorin [2006] takes a different approach. She treats the use of performance
comparisons of quantitative disclosures in press releases as emphasis in the form of
reinforcement. Of the 1,109 quantitative amounts (from 172 press releases) to which a
performance comparison was applied, 1,020 (92 percent) were applied to positive
amounts.
Short and Palmer [2003] investigate the way CEOs monitor and interpret
organizational performance using internal and external performance references. They
find that CEOs of large and highly performing firms use more external performance
referents in their performance explanations than CEOs of small and poorly performing
firms.
3.2.8 Choice of earnings number
This disclosure strategy is concerned with the numerical disclosures;
specifically the earnings number (see Table 8). It involves selectivity in terms of
choosing specific earnings numbers and omitting others.
There has been substantial research on pro forma earnings; however, previous
research has not explicitly identified the disclosure of pro forma earnings as an
impression management strategy. Pro forma earnings are earnings numbers other than
those calculated under GAAP. Thus, pro forma earnings can be computed in many
different ways. They have been referred to as “earnings excluding all the bad stuff”
[Fox, 1998, p. 48]. Two possible explanations for pro forma earnings have been put
forward [Bowen et al., 2005]: (1) managers are motivated to provide users with more
accurate useful information or (2) managers are making the firm look more profitable.
If the latter motivation is the case, then the use of pro forma earnings fits the
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35. definition of impression management in the sense that pro forma earnings introduce
positive bias into corporate narratives.
Johnson and Schwartz [2005] provide evidence that pro forma earnings are
predominantly income increasing over their GAAP counterpart. They state that firms
use pro forma earnings for the purpose of “managing readers’ perceptions of
earnings” [p. 924]. They find support for opportunistic behavior in that managers go
far beyond just excluding non-recurring items from pro forma earnings, by including
other unspecified adjustments. Johnson and Schwartz also find that firms that report
pro forma earnings have earnings that are no different in persistency than those of
firms that report GAAP earnings. This, they say, contradicts the notion that firms use
pro forma earnings to draw investors’ attention to less persistent, more transitory
items in GAAP earnings (i.e. with the purpose of providing users with incremental
information).
Guillamon-Saorin [2006] defines selectivity (a quantitative measure) as the
choice of an earnings amount for inclusion in press releases from the whole range of
earnings figures available in the underlying financial statements. She finds that firms
select the highest earnings number suggests that firms portray their performance in a
positive light. This indicates an impression management motivation.
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36. Table 8
Summary of choice of earnings number studies
Study Country Sample Narrative Content analysis Independent Results
size sections technique variables
Impression management – Preparer perspective
Guillamon- UK and Spain 172 Press release Choice of earnings Firm size, Selection of information for disclosure
Saorin [2006] number Firm performance, introduces bias into financial reporting.
Nationality,
Industry
Incremental information – User perspective
Frederickson US 46 MBA Earnings GAAP or pro forma Earnings, Risk, Unintentional cognitive effects cause
and Miller students; 34 announcements earnings numbers Earnings growth, unsophisticated investors to perceive pro
[2004] analysts Credibility, forma earnings announcements as more
Favorableness favorable.
Johnson and US 433 Press release Pro forma earnings Profitability, Firm Income-increasing pro forma adjustments
Schwartz disclosures size, Market risk, to GAAP earnings dominate the sample.
[2005] Ownership, Growth Some highly profitable firms make
expectation income-decreasing pro forma adjustments.
Bowen et al. US 206 firms, Earnings press Pro forma earnings Value relevance, Firms emphasize metrics that are more
[2005] 1,188 firm release disclosures Firm performance, value relevant and that portray more
quarters Media coverage, favorable firm performance.
Level of scrutiny
from regulator
35
37. 3.2.9 Performance attribution
Research on the attribution of organizational outcomes (see Table 9) focuses
on performance explanations. Managers are assumed to act in a self-serving manner,
attributing positive organizational outcomes to internal factors (entitlements) and
negative organizational outcomes to external factors (excuses).
Baginski et al. [2000, 2004] do not regard performance attributions as
constituting impression management. Rather, consistent with the incremental
information school, performance attributions are regarded as a disclosure strategy for
overcoming information asymmetries by providing additional explanations “which aid
investors in the interpretation of management forecasts by confirming known
relationships between attribution and profitability or by identifying additional causes
that investors should consider when forecasting earnings” [Baginski et al., 2004, p. 1].
However, they do not examine self-serving attributions as such. They simply classify
them into internal and external attributions (which they refer to as “causal
attributions”) without linking them to positive or negative organizational outcomes.
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