Merkl-Davies, Doris M., Brennan, Niamh M. and McLeay, Stuart J. [2011] Impression management and retrospective sense-making in corporate narratives: A social psychology perspective. Accounting, Auditing and Accountability Journal, 24(3): 315-344.
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.
As an integral part of management control system (MCS), performance measurement systems (PMS) influence manager's behavior towards enhancing his/her performance through the assessment of the performance in performance evaluation process.
Research Inventy : International Journal of Engineering and Scienceinventy
Research Inventy : International Journal of Engineering and Science is published by the group of young academic and industrial researchers with 12 Issues per year. It is an online as well as print version open access journal that provides rapid publication (monthly) of articles in all areas of the subject such as: civil, mechanical, chemical, electronic and computer engineering as well as production and information technology. The Journal welcomes the submission of manuscripts that meet the general criteria of significance and scientific excellence. Papers will be published by rapid process within 20 days after acceptance and peer review process takes only 7 days. All articles published in Research Inventy will be peer-reviewed.
This study examines how employee participation in the job evaluation process during a compensation system implementation affects pay satisfaction. The researchers hypothesize that implementing a participatively developed compensation system will increase pay satisfaction based on prior literature showing procedural fairness and participation influence outcomes. A quasi-experimental field study was conducted at a manufacturing firm to longitudinally and between-group compare the effects of participation on pay satisfaction during implementation of a new compensation system.
Merkl-Davies, Doris M. and Brennan, Niamh M. [2007] Discretionary Disclosure ...Prof Niamh M. Brennan
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.
11.vol 0004www.iiste.org call for paper no 1 pp. 40-64Alexander Decker
This study examines how contextual variables moderate the relationship between corporate social responsibility (CSR) and corporate financial performance (CFP) among Indonesian companies. The study developed two regression models to analyze 220 manufacturing firms listed on the Jakarta stock exchange. The contextual variables investigated include business environment, business strategy, formalization, decentralization, and control systems. The findings show that business environment moderates the CSR-CFP link under the good management theory. Decentralization also moderates the CSR-CFP link under the slack resource theory. Reliance on a combination of diagnostic and interactive control systems further moderates the CSR-CFP link based on slack resource theory.
11.isea vol 0004www.iiste.org call for paper no 1 pp. 40-64Alexander Decker
This study aims to investigate whether contextual variables moderate the relationship between corporate social responsibility (CSR) and corporate financial performance (CFP) under slack resource theory and good management theory. The study examines 220 manufacturing companies in Indonesia. Two regression models were developed to analyze how business environment, business strategy, organizational structure, and control systems impact the CSR-CFP relationship. The findings show that business environment moderates the CSR-CFP link under good management theory. Decentralization moderates the CSR-CFP link under slack resource theory. Reliance on a combination of diagnostic and interactive control systems also moderates the CSR-CFP link based on slack resource theory.
This document describes a study that examines how different "regulatory focus characters" moderate the relationship between job satisfaction and organizational commitment. The study develops a conceptual framework based on regulatory focus theory that proposes four regulatory focus characters: Achiever, Conservative, Rationalist, and Indifferent. The study hypothesizes that these characters will differentially moderate the relationship between extrinsic job satisfaction and two types of organizational commitment (continuance commitment and normative commitment), and that this moderation will differ between the private and public sectors. Regression analyses will test whether the relationships between extrinsic satisfaction and commitment are stronger for Conservatives and Rationalists compared to the other characters. The findings could help organizations understand how personality impacts attitudes to better manage employee commitment
Employee’s Involvement on Organizational Behavior: Political or Stressed.Iktiham Bin Taher
This document discusses organizational politics and job stress. It begins by introducing employees as valuable assets and noting that organizational politics and job stress can impact employee performance. Organizational politics is a common phenomenon that arises from individuals and groups competing for resources and power. Job stress stems from many factors at work and home and can negatively impact both employees and management. This study aims to investigate the perception of organizational politics and job stress among employees in Bangladesh and help managers better understand and deal with stressed employees. It outlines the objectives, methodology involving surveys, and activity schedule for the research.
As an integral part of management control system (MCS), performance measurement systems (PMS) influence manager's behavior towards enhancing his/her performance through the assessment of the performance in performance evaluation process.
Research Inventy : International Journal of Engineering and Scienceinventy
Research Inventy : International Journal of Engineering and Science is published by the group of young academic and industrial researchers with 12 Issues per year. It is an online as well as print version open access journal that provides rapid publication (monthly) of articles in all areas of the subject such as: civil, mechanical, chemical, electronic and computer engineering as well as production and information technology. The Journal welcomes the submission of manuscripts that meet the general criteria of significance and scientific excellence. Papers will be published by rapid process within 20 days after acceptance and peer review process takes only 7 days. All articles published in Research Inventy will be peer-reviewed.
This study examines how employee participation in the job evaluation process during a compensation system implementation affects pay satisfaction. The researchers hypothesize that implementing a participatively developed compensation system will increase pay satisfaction based on prior literature showing procedural fairness and participation influence outcomes. A quasi-experimental field study was conducted at a manufacturing firm to longitudinally and between-group compare the effects of participation on pay satisfaction during implementation of a new compensation system.
Merkl-Davies, Doris M. and Brennan, Niamh M. [2007] Discretionary Disclosure ...Prof Niamh M. Brennan
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.
11.vol 0004www.iiste.org call for paper no 1 pp. 40-64Alexander Decker
This study examines how contextual variables moderate the relationship between corporate social responsibility (CSR) and corporate financial performance (CFP) among Indonesian companies. The study developed two regression models to analyze 220 manufacturing firms listed on the Jakarta stock exchange. The contextual variables investigated include business environment, business strategy, formalization, decentralization, and control systems. The findings show that business environment moderates the CSR-CFP link under the good management theory. Decentralization also moderates the CSR-CFP link under the slack resource theory. Reliance on a combination of diagnostic and interactive control systems further moderates the CSR-CFP link based on slack resource theory.
11.isea vol 0004www.iiste.org call for paper no 1 pp. 40-64Alexander Decker
This study aims to investigate whether contextual variables moderate the relationship between corporate social responsibility (CSR) and corporate financial performance (CFP) under slack resource theory and good management theory. The study examines 220 manufacturing companies in Indonesia. Two regression models were developed to analyze how business environment, business strategy, organizational structure, and control systems impact the CSR-CFP relationship. The findings show that business environment moderates the CSR-CFP link under good management theory. Decentralization moderates the CSR-CFP link under slack resource theory. Reliance on a combination of diagnostic and interactive control systems also moderates the CSR-CFP link based on slack resource theory.
This document describes a study that examines how different "regulatory focus characters" moderate the relationship between job satisfaction and organizational commitment. The study develops a conceptual framework based on regulatory focus theory that proposes four regulatory focus characters: Achiever, Conservative, Rationalist, and Indifferent. The study hypothesizes that these characters will differentially moderate the relationship between extrinsic job satisfaction and two types of organizational commitment (continuance commitment and normative commitment), and that this moderation will differ between the private and public sectors. Regression analyses will test whether the relationships between extrinsic satisfaction and commitment are stronger for Conservatives and Rationalists compared to the other characters. The findings could help organizations understand how personality impacts attitudes to better manage employee commitment
Employee’s Involvement on Organizational Behavior: Political or Stressed.Iktiham Bin Taher
This document discusses organizational politics and job stress. It begins by introducing employees as valuable assets and noting that organizational politics and job stress can impact employee performance. Organizational politics is a common phenomenon that arises from individuals and groups competing for resources and power. Job stress stems from many factors at work and home and can negatively impact both employees and management. This study aims to investigate the perception of organizational politics and job stress among employees in Bangladesh and help managers better understand and deal with stressed employees. It outlines the objectives, methodology involving surveys, and activity schedule for the research.
In order to survive and sustain in today’s turbulent business environment an organisation needs to explore opportunities and avoid threats constantly. Organisations succeed or fail due to the strategies formulated by its decision makers. Executives working in organisations possess unique perceptions regarding the events occurring in the business environment and they exhibit varied scanning behaviours. This uniqueness is reflected in their decisions and strategies.
This paper examines how performance measurement systems can promote organizational learning and strategic alignment in Thailand's public sector. It hypothesizes that interactive use of strategic performance measurement systems leads to both organizational learning and strategic alignment. A survey was administered and results showed significant relationships between interactive performance measurement, organizational learning, and strategic alignment. Organizational learning was also found to indirectly support strategic alignment through performance measurement. The study contributes to research on using performance measurement in inter-organizational networks within the public sector.
14 the relationship between job burnout, organizational citizenship behavior,...INFOGAIN PUBLICATION
This document discusses a study that examines the relationship between job burnout, organizational citizenship behavior, and staff performance in a state tax organization. It provides background on key concepts like job burnout (including its components of emotional exhaustion, depersonalization, and reduced personal efficacy), organizational citizenship behavior (including its dimensions of civil behavior, conscientiousness, philanthropy, courtesy, and sportsmanship), and staff performance. The study aims to evaluate how job burnout and organizational citizenship behavior impact staff performance. It hypothesizes negative and positive relationships respectively and surveys 311 employees in a state tax organization to analyze the relationships.
The document discusses the performance evaluation context and argues that it is a formal accountability mechanism embedded within a complex social, emotional, cognitive, political, and relationship context. It reviews past research on performance evaluation that has focused on instrumentation and process issues without fully considering this broader contextual backdrop. The paper proposes a framework grounded in affective events theory and emotion cycle theory to better understand the theoretical dynamics and outcomes of performance evaluation when considering the full social, emotional, cognitive, political, and relationship context.
International Journal of Humanities and Social Science Invention (IJHSSI) is an international journal intended for professionals and researchers in all fields of Humanities and Social Science. IJHSSI publishes research articles and reviews within the whole field Humanities and Social Science, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
International Journal of Business and Management Invention (IJBMI)inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
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 outlines a comprehensive plan for conducting an organizational behavior audit. The plan involves four key processes: 1) defining the problem, 2) collecting data through interviews and observations, 3) analyzing the collected data, and 4) proposing solutions based on the findings. Conducting such audits helps organizations understand employee behaviors, identify factors influencing productivity, and make improvements to enhance job satisfaction and organizational performance. Regular audits are important for organizations to foster loyalty, retain talented employees, and effectively manage a diverse workforce.
Attitude Formation of Benefits Satisfaction: Knowledge and Fit of BenefitsWaqas Tariq
Using the theoretical framework of the Theory of Reasoned Action [6], we examine benefits satisfaction as an attitude formed by the beliefs about benefits (i.e., benefits knowledge) and the perceived value of these benefits (i.e., fit of benefits to individual needs). We use questionnaires to gather data from a random sample of 591 employees in a large county agency in the South-eastern United States. The data support that knowledge of benefits is associated with enhanced benefits satisfaction and mediates the effect of explanations about benefits on satisfaction. The results provide strong evidence that benefits perceived to suit employee needs generate highest benefits satisfaction. Employees satisfied with their benefits are less likely to consider leaving the organization. The tested model is a starting point for future studies to apply the extended Theory of Reasoned Action [1] and incorporate perceived behavioural control and subjective norms (i.e., co-workers’ attitudes) in forming benefits satisfaction. Understanding employees’ affective and cognitive reactions to compensation, including benefits, can render better practices. Companies should use information campaigns to improve employee beliefs about benefits. Better attentiveness to individual needs and preferences can maximize the utility of a benefits plan and improve its acceptance. We replicate and extend past research in a parsimonious model of benefits satisfaction with a random sample of public sector employees.
11.impact of organizational justice on organizational effectivenessAlexander Decker
This document summarizes a research paper that examines the impact of organizational justice on organizational effectiveness. It begins by defining organizational justice and distinguishing between its two main forms: distributive justice and procedural justice. It then reviews several studies that found positive relationships between perceptions of organizational justice and factors like job satisfaction and organizational commitment, which are indirectly linked to organizational effectiveness. The document concludes that promoting fairness in procedures and outcomes can increase employee performance and commitment, which are key to effective organizations. It identifies the need for more longitudinal research directly examining the relationship between organizational justice and effectiveness.
Impact of organizational justice on organizational effectivenessAlexander Decker
This document summarizes a research paper that examines the impact of organizational justice on organizational effectiveness. It begins by defining organizational justice and distinguishing between its two main forms: distributive justice and procedural justice. It then reviews several studies that found positive relationships between perceptions of organizational justice and factors like job satisfaction and organizational commitment, which are indirectly linked to organizational effectiveness. The document concludes that promoting fairness in procedures and outcomes can increase employee performance and commitment, which are key to effective organizations. It identifies the need for more longitudinal research directly examining the relationship between organizational justice and effectiveness.
This document summarizes a research paper on the future of management accounting from a South Australian perspective. It discusses triggers driving changes in management accounting like globalization and technology. It finds management accountants taking on more strategic roles as business analysts, internal consultants, and members of cross-functional teams. Their tasks increasingly involve decision making, strategy formulation, and performance measurement compared to traditional tasks like costing and variance analysis. Required skills are also changing from computational to those enabling management of change and organizational processes. The research found management accountants see their role as changing and emphasize information provision, consulting, and analysis over financial tasks.
Organizational Behaviour Research: A Critical Analysisiosrjce
The paper examines the current trend in OB research. It looks into the different dynamics in public
and private sector, it analyses the transformational change in Indian organizations. It also reflects the future
directions inresearch focus.
The document discusses the complex relationship between the implementation of management accounting systems and the adoption of knowledge management. It explores this relationship using the directed acyclic graph technique. The key points are:
1) The implementation of management accounting systems is both a cause and consequence of adopting knowledge management, but their relationship has not been fully examined.
2) Applying the directed acyclic graph method reveals that the implementation of management accounting systems influences the adoption of knowledge management first in their relationship.
3) However, adopting knowledge management then has a positive influence back on implementing management accounting systems. This provides insight into the complicated mutual relationship between the two factors.
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.
This document summarizes a research article that analyzes how Chinese companies operating in Shanghai incorporate social, environmental, and economic measures into their strategic performance measurement systems. The researchers surveyed 81 Chinese companies. Their findings show that while more companies are promoting sustainability measures as part of their long-term business strategies, the effective integration of these non-financial measures varies across companies. The researchers examine what factors determine the differences in how companies incorporate sustainability measures into their performance systems and business strategies.
This document summarizes research on factors that influence the successful implementation of mergers and acquisitions. It reviews literature from economics, finance, strategic management, and behavioral perspectives. Key findings include:
1) Research shows fewer than 20% of mergers and acquisitions achieve their desired objectives due to issues like unrealistic expectations, poor planning, talent loss, and cultural clashes during integration.
2) Significant research has explored factors like organizational culture, personnel morale, and career impacts, but human and organizational dynamics remain less explored than strategic and technological dimensions.
3) A landmark study of over 50 mergers identified problems like underestimating integration challenges, destruction of core competencies, and cultural clashes triggering stress as primary causes of
This document discusses organizational analysis and value chain analysis. It provides an overview of several models for organizational analysis, including the strategic triangle model, SWOT model, rational model, natural system model, and sociotechnical model. It then discusses value chain analysis and its components. Value chain analysis examines activities involved in production and marketing to determine strengths and weaknesses. The document outlines the key components of value chain analysis including organizational structure, culture, finance, marketing, operations, human resources, and information systems.
This document summarizes a study that examined the relationship between job characteristics, perceived organizational support, job satisfaction, and turnover intentions among nonprofit employees. The study found that perceived organizational support was the strongest predictor of job satisfaction and turnover intentions. Autonomy was also found to directly predict job satisfaction and indirectly predict turnover intentions through job satisfaction. However, the other job characteristics did not significantly predict the outcomes when controlling for perceived organizational support. The results suggest nonprofit employees care more about their relationship with their organization than how their work is structured.
The impact of management commitment alignment on salespersons' adoption of sales force automation technologies: An empirical investigation by Robert Cascio, Babu John Mariadoss , Nacef Mouri
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.
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.
In order to survive and sustain in today’s turbulent business environment an organisation needs to explore opportunities and avoid threats constantly. Organisations succeed or fail due to the strategies formulated by its decision makers. Executives working in organisations possess unique perceptions regarding the events occurring in the business environment and they exhibit varied scanning behaviours. This uniqueness is reflected in their decisions and strategies.
This paper examines how performance measurement systems can promote organizational learning and strategic alignment in Thailand's public sector. It hypothesizes that interactive use of strategic performance measurement systems leads to both organizational learning and strategic alignment. A survey was administered and results showed significant relationships between interactive performance measurement, organizational learning, and strategic alignment. Organizational learning was also found to indirectly support strategic alignment through performance measurement. The study contributes to research on using performance measurement in inter-organizational networks within the public sector.
14 the relationship between job burnout, organizational citizenship behavior,...INFOGAIN PUBLICATION
This document discusses a study that examines the relationship between job burnout, organizational citizenship behavior, and staff performance in a state tax organization. It provides background on key concepts like job burnout (including its components of emotional exhaustion, depersonalization, and reduced personal efficacy), organizational citizenship behavior (including its dimensions of civil behavior, conscientiousness, philanthropy, courtesy, and sportsmanship), and staff performance. The study aims to evaluate how job burnout and organizational citizenship behavior impact staff performance. It hypothesizes negative and positive relationships respectively and surveys 311 employees in a state tax organization to analyze the relationships.
The document discusses the performance evaluation context and argues that it is a formal accountability mechanism embedded within a complex social, emotional, cognitive, political, and relationship context. It reviews past research on performance evaluation that has focused on instrumentation and process issues without fully considering this broader contextual backdrop. The paper proposes a framework grounded in affective events theory and emotion cycle theory to better understand the theoretical dynamics and outcomes of performance evaluation when considering the full social, emotional, cognitive, political, and relationship context.
International Journal of Humanities and Social Science Invention (IJHSSI) is an international journal intended for professionals and researchers in all fields of Humanities and Social Science. IJHSSI publishes research articles and reviews within the whole field Humanities and Social Science, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
International Journal of Business and Management Invention (IJBMI)inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
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 outlines a comprehensive plan for conducting an organizational behavior audit. The plan involves four key processes: 1) defining the problem, 2) collecting data through interviews and observations, 3) analyzing the collected data, and 4) proposing solutions based on the findings. Conducting such audits helps organizations understand employee behaviors, identify factors influencing productivity, and make improvements to enhance job satisfaction and organizational performance. Regular audits are important for organizations to foster loyalty, retain talented employees, and effectively manage a diverse workforce.
Attitude Formation of Benefits Satisfaction: Knowledge and Fit of BenefitsWaqas Tariq
Using the theoretical framework of the Theory of Reasoned Action [6], we examine benefits satisfaction as an attitude formed by the beliefs about benefits (i.e., benefits knowledge) and the perceived value of these benefits (i.e., fit of benefits to individual needs). We use questionnaires to gather data from a random sample of 591 employees in a large county agency in the South-eastern United States. The data support that knowledge of benefits is associated with enhanced benefits satisfaction and mediates the effect of explanations about benefits on satisfaction. The results provide strong evidence that benefits perceived to suit employee needs generate highest benefits satisfaction. Employees satisfied with their benefits are less likely to consider leaving the organization. The tested model is a starting point for future studies to apply the extended Theory of Reasoned Action [1] and incorporate perceived behavioural control and subjective norms (i.e., co-workers’ attitudes) in forming benefits satisfaction. Understanding employees’ affective and cognitive reactions to compensation, including benefits, can render better practices. Companies should use information campaigns to improve employee beliefs about benefits. Better attentiveness to individual needs and preferences can maximize the utility of a benefits plan and improve its acceptance. We replicate and extend past research in a parsimonious model of benefits satisfaction with a random sample of public sector employees.
11.impact of organizational justice on organizational effectivenessAlexander Decker
This document summarizes a research paper that examines the impact of organizational justice on organizational effectiveness. It begins by defining organizational justice and distinguishing between its two main forms: distributive justice and procedural justice. It then reviews several studies that found positive relationships between perceptions of organizational justice and factors like job satisfaction and organizational commitment, which are indirectly linked to organizational effectiveness. The document concludes that promoting fairness in procedures and outcomes can increase employee performance and commitment, which are key to effective organizations. It identifies the need for more longitudinal research directly examining the relationship between organizational justice and effectiveness.
Impact of organizational justice on organizational effectivenessAlexander Decker
This document summarizes a research paper that examines the impact of organizational justice on organizational effectiveness. It begins by defining organizational justice and distinguishing between its two main forms: distributive justice and procedural justice. It then reviews several studies that found positive relationships between perceptions of organizational justice and factors like job satisfaction and organizational commitment, which are indirectly linked to organizational effectiveness. The document concludes that promoting fairness in procedures and outcomes can increase employee performance and commitment, which are key to effective organizations. It identifies the need for more longitudinal research directly examining the relationship between organizational justice and effectiveness.
This document summarizes a research paper on the future of management accounting from a South Australian perspective. It discusses triggers driving changes in management accounting like globalization and technology. It finds management accountants taking on more strategic roles as business analysts, internal consultants, and members of cross-functional teams. Their tasks increasingly involve decision making, strategy formulation, and performance measurement compared to traditional tasks like costing and variance analysis. Required skills are also changing from computational to those enabling management of change and organizational processes. The research found management accountants see their role as changing and emphasize information provision, consulting, and analysis over financial tasks.
Organizational Behaviour Research: A Critical Analysisiosrjce
The paper examines the current trend in OB research. It looks into the different dynamics in public
and private sector, it analyses the transformational change in Indian organizations. It also reflects the future
directions inresearch focus.
The document discusses the complex relationship between the implementation of management accounting systems and the adoption of knowledge management. It explores this relationship using the directed acyclic graph technique. The key points are:
1) The implementation of management accounting systems is both a cause and consequence of adopting knowledge management, but their relationship has not been fully examined.
2) Applying the directed acyclic graph method reveals that the implementation of management accounting systems influences the adoption of knowledge management first in their relationship.
3) However, adopting knowledge management then has a positive influence back on implementing management accounting systems. This provides insight into the complicated mutual relationship between the two factors.
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.
This document summarizes a research article that analyzes how Chinese companies operating in Shanghai incorporate social, environmental, and economic measures into their strategic performance measurement systems. The researchers surveyed 81 Chinese companies. Their findings show that while more companies are promoting sustainability measures as part of their long-term business strategies, the effective integration of these non-financial measures varies across companies. The researchers examine what factors determine the differences in how companies incorporate sustainability measures into their performance systems and business strategies.
This document summarizes research on factors that influence the successful implementation of mergers and acquisitions. It reviews literature from economics, finance, strategic management, and behavioral perspectives. Key findings include:
1) Research shows fewer than 20% of mergers and acquisitions achieve their desired objectives due to issues like unrealistic expectations, poor planning, talent loss, and cultural clashes during integration.
2) Significant research has explored factors like organizational culture, personnel morale, and career impacts, but human and organizational dynamics remain less explored than strategic and technological dimensions.
3) A landmark study of over 50 mergers identified problems like underestimating integration challenges, destruction of core competencies, and cultural clashes triggering stress as primary causes of
This document discusses organizational analysis and value chain analysis. It provides an overview of several models for organizational analysis, including the strategic triangle model, SWOT model, rational model, natural system model, and sociotechnical model. It then discusses value chain analysis and its components. Value chain analysis examines activities involved in production and marketing to determine strengths and weaknesses. The document outlines the key components of value chain analysis including organizational structure, culture, finance, marketing, operations, human resources, and information systems.
This document summarizes a study that examined the relationship between job characteristics, perceived organizational support, job satisfaction, and turnover intentions among nonprofit employees. The study found that perceived organizational support was the strongest predictor of job satisfaction and turnover intentions. Autonomy was also found to directly predict job satisfaction and indirectly predict turnover intentions through job satisfaction. However, the other job characteristics did not significantly predict the outcomes when controlling for perceived organizational support. The results suggest nonprofit employees care more about their relationship with their organization than how their work is structured.
The impact of management commitment alignment on salespersons' adoption of sales force automation technologies: An empirical investigation by Robert Cascio, Babu John Mariadoss , Nacef Mouri
Industrial Marketing Management : The impact of management commitment alignme...
Similar to Merkl-Davies, Doris M., Brennan, Niamh M. and McLeay, Stuart J. [2011] Impression management and retrospective sense-making in corporate narratives: A social psychology perspective. Accounting, Auditing and Accountability Journal, 24(3): 315-344.
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.
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.
Readings Chapters 9 & 10 in the Dess, Lumpkin, & Eisner textbook, w.docxlaurieellan
Readings: Chapters 9 & 10 in the Dess, Lumpkin, & Eisner textbook, week 5 lecture notes (
Chapter 9 and 10 Lecture
), and review
Chapter 9
and
Chapter 10
PowerPoint presentations.
This week we focus on how management can develop and use effective strategic control. The first two discussions below address:
Informational control (the ability to respond effectively to change), and, Behavioral control (the appropriate balance and alignment among an organization's culture, reward, and boundaries). The third section, focuses on strategic control from a broader perspective - Corporate governance. Here, we focus on a firm's need to assure that the elected representatives (board of directors) of the owners of the firm (shareholders) ensure that the firm's executives (the management team - headed by the Chief Executive Officer) strive to fulfill their fiduciary duty of maximizing long-term shareholder value.
Your text addresses "traditional" and "contemporary" approaches to informational control. Although both have the same purpose - using information to select, monitor, and implement effective strategies - they have a different impact on employees and organizational outcomes. Also, as environmental conditions become more complex or unpredictable, the need for contemporary approaches to informational control increases.
Traditional Approach to Strategic Control - With a traditional approach to strategic control, goals and objectives are set, strategies are implemented, and performance is compared to the desired standards. Then there is a feedback loop in which information about how performance compares to goals is used to revise strategies. Thus, it is a highly sequential process. Examples of control systems that rely on feedback controls include sales quotas, operating budgets, and production schedules. Traditional process can often be time consuming and many firms only update budgets or other control devices once a year during annual planning meetings. Thus, it may be best suited for environments that are relatively simple and stable.
Contemporary Approach to Strategic Control - Because business conditions typically change rapidly, information controls are needed that can quickly adjust. With contemporary controls, an organization's assumptions, goals, and strategies are continuously monitored, tested, and reviewed. Thus, anticipating and adapting to change is built into the control process. Both informational and behavioral controls are needed for the contemporary approach. Informational controls ask whether the organization is "doing the right things." Behavioral controls, by contrast, ask whether the organization is "doing things right." With this framework, therefore, you can illustrate how the combination of effectiveness ("doing the right things") and efficiency ("doing things right") applies in the context of strategic controls.
Behavioral control is an approach to implementing strategy that relies on three behavioral forces or "levers" -.
The document examines how the behaviors of strategic account managers impact relationship outcomes like customer trust, role performance, and synergistic solutions. It proposes and tests a model showing that customer orientation positively impacts role performance and synergistic solutions, increasing customer trust, while selling orientation negatively impacts synergistic solutions and trust. Team selling is found to positively impact synergistic solutions and trust.
15Reflection and Discussion Forum Week 3Sri ChaitaAnastaciaShadelb
1
5
Reflection and Discussion Forum Week 3
Sri Chaitanya Patluri
University of the Cumberlands
Organizational Behavior
Dr. Johnny Chavez
Sep 07, 2021
Reflection
Motivation is defined as a set of motives or conditions that drive the behavior of individuals, organizational units, or projects. The purpose of motivation concepts is to help them focus on the primary purpose of the process and the related motives that underlie it. Once they understand motivation concepts, they can use them to motivate people and accomplish tasks. Motivation concepts help people understand why they do what they do and help them identify the steps that motivate motivation. The next step understands the steps needed to move from one problem domain to another. The theories that have been developed are generally confusing, contradictory, and contradictory to the originated objectives. The more theory that is used, the more contradictory it is to the objectives it supposedly was intended to achieve. However, it is essential to realize that more theories and theories will lead to a more consistent method of achieving objectives(Nasution, 2021).
Most organizations today know the objectives and are using organizational, motivational methods to achieve them. Organization-level factors such as human resources, compensation, and support systems influence whether an organization achieves its goals. These factors influence many factors, including the organization's performance as measured by objectives. Employee job engagement can affect managerial relationships and organizational behaviors, and the firm's overall success. It can improve compliance, employee satisfaction, better financial performance, increased employee motivation, and improved corporate image. The degree to which an organization considers its corporate environment a living environment is called corporate culture. The potential for employee empowerment and communication increases when there is corporate culture. The driving forces behind the decision-making process are the drive for performance, and both factors drive performance. The more drive for performance, the more drive for performance needs to be met. One of the significant factors that drive performance is the drive for return on investment. The second major factor that drives performance is the drive for achievement(Robbins & Judge, 2018).
Motivation plays a significant role in organizational functioning and decision-making. A good motivator's personality is a significant factor influencing their decision-making abilities. JCM utilizes opportunities to take risks in order to learn. It is essential because there is a risk associated with going beyond the requirements set for them in the job they are doing. Some employees find that adding pressure to achieve a JCM Goal of getting more done results in increased pressure to get things done and less commitment to the organization. To achieve this goal, employees must take on more responsibility and n ...
15Reflection and Discussion Forum Week 3Sri ChaitaKiyokoSlagleis
1
5
Reflection and Discussion Forum Week 3
Sri Chaitanya Patluri
University of the Cumberlands
Organizational Behavior
Dr. Johnny Chavez
Sep 07, 2021
Reflection
Motivation is defined as a set of motives or conditions that drive the behavior of individuals, organizational units, or projects. The purpose of motivation concepts is to help them focus on the primary purpose of the process and the related motives that underlie it. Once they understand motivation concepts, they can use them to motivate people and accomplish tasks. Motivation concepts help people understand why they do what they do and help them identify the steps that motivate motivation. The next step understands the steps needed to move from one problem domain to another. The theories that have been developed are generally confusing, contradictory, and contradictory to the originated objectives. The more theory that is used, the more contradictory it is to the objectives it supposedly was intended to achieve. However, it is essential to realize that more theories and theories will lead to a more consistent method of achieving objectives(Nasution, 2021).
Most organizations today know the objectives and are using organizational, motivational methods to achieve them. Organization-level factors such as human resources, compensation, and support systems influence whether an organization achieves its goals. These factors influence many factors, including the organization's performance as measured by objectives. Employee job engagement can affect managerial relationships and organizational behaviors, and the firm's overall success. It can improve compliance, employee satisfaction, better financial performance, increased employee motivation, and improved corporate image. The degree to which an organization considers its corporate environment a living environment is called corporate culture. The potential for employee empowerment and communication increases when there is corporate culture. The driving forces behind the decision-making process are the drive for performance, and both factors drive performance. The more drive for performance, the more drive for performance needs to be met. One of the significant factors that drive performance is the drive for return on investment. The second major factor that drives performance is the drive for achievement(Robbins & Judge, 2018).
Motivation plays a significant role in organizational functioning and decision-making. A good motivator's personality is a significant factor influencing their decision-making abilities. JCM utilizes opportunities to take risks in order to learn. It is essential because there is a risk associated with going beyond the requirements set for them in the job they are doing. Some employees find that adding pressure to achieve a JCM Goal of getting more done results in increased pressure to get things done and less commitment to the organization. To achieve this goal, employees must take on more responsibility and n ...
his week we focus on how management can develop and use effectivmeagantobias
his week we focus on how management can develop and use effective strategic control. The first two discussions below address:
Informational control (the ability to respond effectively to change), and, Behavioral control (the appropriate balance and alignment among an organization's culture, reward, and boundaries). The third section, focuses on strategic control from a broader perspective - Corporate governance. Here, we focus on a firm's need to assure that the elected representatives (board of directors) of the owners of the firm (shareholders) ensure that the firm's executives (the management team - headed by the Chief Executive Officer) strive to fulfill their fiduciary duty of maximizing long-term shareholder value.
Our readings address "traditional" and "contemporary" approaches to informational control. Although both have the same purpose - using information to select, monitor, and implement effective strategies - they have a different impact on employees and organizational outcomes. Also, as environmental conditions become more complex or unpredictable, the need for contemporary approaches to informational control increases.
Traditional Approach to Strategic Control - With a traditional approach to strategic control, goals and objectives are set, strategies are implemented, and performance is compared to the desired standards. Then there is a feedback loop in which information about how performance compares to goals is used to revise strategies. Thus, it is a highly sequential process. Examples of control systems that rely on feedback controls include sales quotas, operating budgets, and production schedules. Traditional process can often be time consuming and many firms only update budgets or other control devices once a year during annual planning meetings. Thus, it may be best suited for environments that are relatively simple and stable.
Contemporary Approach to Strategic Control - Because business conditions typically change rapidly, information controls are needed that can quickly adjust. With contemporary controls, an organization's assumptions, goals, and strategies are continuously monitored, tested, and reviewed. Thus, anticipating and adapting to change is built into the control process. Both informational and behavioral controls are needed for the contemporary approach. Informational controls ask whether the organization is "doing the right things." Behavioral controls, by contrast, ask whether the organization is "doing things right." With this framework, therefore, you can illustrate how the combination of effectiveness ("doing the right things") and efficiency ("doing things right") applies in the context of strategic controls.
Behavioral control is an approach to implementing strategy that relies on three behavioral forces or "levers" - culture; rewards and incentives; and, boundaries. The aim is to use these levers to evoke appropriate actions in the workforce and also to maintain a proper balance between these t ...
A stakeholder approach to corporate social responsibility, reputation and bus...Shifur Rahman
A stakeholder approach to corporate
social responsibility, reputation and
business performance
A research paper based presentation. The paper is available through the link mentioned below............
http://hdl.handle.net/10536/DRO/DU:30073833
This document provides a literature review on the role of governance in strategic decision making processes, with a focus on family businesses. It discusses how boards can contribute to strategy through knowledge, skills and networks. Boards can be involved in strategy at different levels, from evaluating proposals to shaping strategic decisions. The literature shows that factors like organizational norms, firm performance and history, and board processes influence board involvement in strategy. However, more research is needed on less formal governance mechanisms like advisory boards and how they function as a practice in strategizing for family firms.
This document provides an overview of tourism management. It discusses key concepts such as the definition of management, the management process, functions of management including planning, organizing, staffing, leading, and controlling. It also covers levels of management from top-level to middle-level to first-level managers. Additionally, it outlines management skills, roles, and the internal and external environment of an organization. Planning is a critical management function and the importance of planning as well as management by objectives is emphasized.
This dissertation explores factors that impact employee performance and well-being within organizations. Chapter 1 introduces the topic and outlines 4 research objectives: 1) determine factors influencing employee performance; 2) investigate the relationship between job satisfaction and well-being; 3) examine how organizational culture impacts behavior and performance; and 4) evaluate employee reactions to organizational change. The study aims to provide empirical insights and practical implications for management.
This dissertation explores factors that impact employee performance and well-being within organizations. It aims to add empirical insights through four main objectives: 1) determine primary factors influencing performance; 2) investigate the relationship between job satisfaction and well-being; 3) examine the influence of organizational culture; and 4) evaluate employee reactions to organizational change. The study seeks to provide quantitative data and practical implications to inform management practices and enhance employee outcomes. A literature review covers key theories in organizational behavior, including classical management, human relations, and contemporary frameworks. Organizational culture and its effect on behavior will also be investigated.
This document provides an overview of contingency theory and its application to management control system (MCS) and management accounting system (MAS) design. It discusses key contingency factors like environmental uncertainty, organizational goals, size, and technology that influence MCS/MAS design. Specifically, it explores how higher environmental uncertainty requires more sophisticated MCS/MAS to handle greater information needs, as well as more differentiated and integrated organizational structures. The document also contrasts mechanistic and organic organizational structures and management processes and their suitability depending on environmental uncertainty levels.
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.
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.
IMPACT OF EMOTIONAL INTELLIGENCE ON HUMAN RESOURCE MANAGEMENT PRACTICES AMONG...IAEME Publication
There is increasing acceptability of emotional intelligence as a major factor in personality assessment and effective human resource management. Emotional intelligence as the ability to build capacity, empathize, co-operate, motivate and develop others cannot be divorced from both effective performance and human resource management systems. The human person is crucial in defining organizational leadership and fortunes in terms of challenges and opportunities and walking across both multinational and bilateral relationships. The growing complexity of the business world requires a great deal of self-confidence, integrity, communication, conflict and diversity management to keep the global enterprise within the paths of productivity and sustainability. Using the exploratory research design and 255 participants the result of this original study indicates strong positive correlation between emotional intelligence and effective human resource management. The paper offers suggestions on further studies between emotional intelligence and human capital development and recommends for conflict management as an integral part of effective human resource management.
Management involves strategic planning, setting objectives, allocating resources, and measuring results. The four main functions of management are planning, organizing, leading, and controlling. Planning involves setting objectives and determining how to achieve them. Organizing involves developing an organizational structure and allocating human resources. Leading involves inspiring others to work towards objectives. Controlling ensures performance meets standards and takes corrective actions when needed. Management occurs at three levels - top level sets long term goals, middle level focuses on tactical planning, and lower level oversees day-to-day operations.
Brennan, Niamh M. [2008] “Introduction. Corporate Governance and Financial Re...Prof Niamh M. Brennan
Corporate governance is the subject of a burgeoning literature. Accordingly it is impossible to summarise an entire field in a book of readings. For this reason, I have focused this selection of readings on the financial reporting aspects of corporate governance, which marries two of my research interests. Given the speed of change in the area of corporate governance, generally-speaking the volume of readings is skewed towards more recent publications. However, some seminal material is included from which a considerable amount of corporate governance empirical research was derived, especially Jensen and Meckling (1976), Fama & Jensen (1983) and Jensen (1993). Denis (2001) suggests that the groundswell for research on corporate governance by financial economists stated with Jensen and Meckling’s (1976) paper on the theory of the firm and featuring agency theory.
This is a focussed interdisciplinary compilation of readings which brings together corporate governance and financial reporting, and issues of accountability. It does not comprise a broad coverage of all corporate governance issues. Instead, it takes a narrower perspective, concentrating only on those corporate governance mechanisms influencing financial reporting and accountability.
Similar to Merkl-Davies, Doris M., Brennan, Niamh M. and McLeay, Stuart J. [2011] Impression management and retrospective sense-making in corporate narratives: A social psychology perspective. Accounting, Auditing and Accountability Journal, 24(3): 315-344. (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., 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.
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.
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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.
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Forecasts were more likely to be disclosed when firms had good news to report.
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Merkl-Davies, Doris M., Brennan, Niamh M. and McLeay, Stuart J. [2011] Impression management and retrospective sense-making in corporate narratives: A social psychology perspective. Accounting, Auditing and Accountability Journal, 24(3): 315-344.
1. Impression management and retrospective sense-making in corporate
narratives: A social psychology perspective
Doris M. Merkl-Davies*, Niamh M. Brennan** and Stuart J. McLeay***
∗
Bangor University; ** University College Dublin; *** University of Sussex.
(Paper published in Accounting, Auditing and Accountability Journal,
24(3)(2011): 315-344)
Correspondence should be addressed to Doris Merkl-Davies, Bangor Business School, Bangor
University, Bangor, Gwynedd LL57 2DG, Great Britain. Tel.: 0044-(0)1248-382120; d.m.merkl-
davies@bangor.ac.uk
i
2. Impression management and retrospective sense-making in corporate
narratives: A social psychology perspective
Abstract
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.
Keywords: Impression management; Retrospective sense-making; Chairmen’s
statements; Social psychology.
Paper type: Research paper
ii
3. 1. INTRODUCTION
Prior research focusing on impression management in a corporate reporting context is
often either explicitly or implicitly based on economics-based theories, particularly
agency theory (Merkl-Davies and Brennan, 2007). Managers are assumed to act
rationally to maximise their utility by exploiting information asymmetries to mislead
investors about financial performance and prospects. This manifests itself in reporting
bias, i.e., the emphasis of positive organisational outcomes and the obfuscation of
negative organisational outcomes in corporate narrative documents. What is more,
managerial behaviour tends to be regarded as only minimally affected by social
relations (Letza et al., 2008). However, we argue that managerial narrative disclosure
decisions are affected by the social constraints arising from the (imagined) presence
of the recipients of corporate reports who use the information in their decision-
making.
Psychological factors thus may provide a richer explanation of managerial impression
management than economic factors. For this reason, we adopt a social psychology
perspective, which complements the narrow concept of economic rationality by
viewing managerial behaviour as subject to social biases arising from the (imagined)
presence of others whose behaviour management is trying to anticipate (Allport,
1954, p. 5). Accounting research can thus benefit from insights from social
psychology which regards impression management as driven by social relations
characterised by an anticipation of an evaluation of conduct (Frink and Ferris, 1998).
Users of corporate narrative documents have been shown to be susceptible to
behavioural effects including a variety of cognitive and social biases. This prevent
them from assessing reporting bias arising from the manipulation of the presentation
and disclosure of information in corporate narrative documents (for example, Baird
and Zelin 2000; Courtis 2004b; Elliott 2006; Frederickson and Miller 2004; Krische
2005).
However, the information communicated in corporate narrative documents impacts
not only on the behaviour of the information recipients, but also on the behaviour of
the information providers in the sense that they anticipate the potential undesirable
consequences of information releases in the form of unfavourable analyst reports,
credit ratings, or news reports (Prakash and Rappaport, 1977). If corporate narrative
documents are regarded as a description of the decision behaviour of the firm’s
management and thus reflect managerial performance (Prakash and Rappaport, 1977,
p. 35), then managers may be prompted to engage in impression management with the
expectation that shareholders and stakeholders may respond in less undesired ways.
Alternatively, the process of anticipating the reactions of information recipients to
managerial disclosures may prompt managers to engage in ‘retrospective sense-
making’ (Aerts, 2005, p. 496) which involves retrospectively framing organisational
outcomes.
1.1 Definition and scope
This paper constitutes an empirical, interdisciplinary study of managerial impression
management focusing on the less researched ‘social’ dimension of corporate narrative
reporting. It is interdisciplinary in the sense that it draws on theoretical insights from
social psychology and uses a content analysis approach developed by social
psychology research to analyse impression management in 93 UK chairmen’s
3
4. statements of listed firms. We regard impression management as a social bias which
involves “controlling or manipulating the attributions or impressions” (Tedeschi and
Riess, 1981, p. 3) of others with the aim of being perceived favourably
(Hooghiemstra, 2000, p. 60). Further, as the presence of shareholders/stakeholders
impacts on the way managers think, feel and express themselves, corporate narrative
documents contain psychological information which can be extracted by means of
content analysis.
1.2 Importance of studying narrative disclosures
Driven by the realisation that fundamentals only explain a small fraction of share
price movements (Cenesizoglu and Timmermann, 2008), accounting researchers have
increasingly turned to the study of corporate narratives. They are either regarded as a
means of providing incremental useful information to improve decision-making or,
alternatively, as a means of providing biased information to mislead investors (Merkl-
Davies and Brennan, 2007). If they are used opportunistically, this may result in
capital misallocations and unfair wealth transfers from shareholders to managers (for
example, in the form of increased compensation via share options). Impression
management thus constitutes an important corporate governance and regulatory issue.
The seriousness of this issue for both firms and shareholders is demonstrated by
Rogers et al.’s (2009) finding that optimistic tone in earnings announcements is
significantly associated with shareholder litigation. This suggests that corporate
narrative documents may contain reporting bias and that investors are unable to assess
this bias in the short term.
1.3 Motivations, objectives and contribution of the paper
In archival accounting research, psychology theories have been found to be useful to
make predictions and interpret results (Koonce and Mercer, 2005). However, most
prior research does not sufficiently use social psychology theories to provide insights
into managerial impression management. This is particularly paradoxical, considering
that this is the discipline in which impression management research originates. Our
objective is to add richer explanations of impression management motivations and
strategies using insights from psychology research. We also consider the possibility
that the conditions of ‘ex post accountability’ (Aerts, 2005, p. 497) which characterise
corporate annual reporting, may not only give rise to impression management, but
also to the retrospective framing of organisational outcomes.
We introduce a method for uncovering impression management pioneered by
psychology research (Newman et al., 2003). Unlike prior studies, which focus on
specific impression management strategies (see Merkl-Davies and Brennan, 2007),
we focus on the linguistic indicators of the psychological processes involved in
managers submitting to an inquiry by shareholders and stakeholders who evaluate
organisational and managerial performance.
Our results from an empirical application of this method based on a sample of 93 UK
chairmen’s statements of listed companies suggest that firms do not use corporate
annual report documents to portray a public image of organisational performance
inconsistent with the view internally held by management (self-presentational
dissimulation). Rather, corporate narratives are used to portray an accurate (i.e.,
consistent with an overall reading of the annual report), albeit favourable, view of
4
5. organisational outcomes and to retrospectively provide explanations of organisational
outcomes and events.
Section 2 discusses the theoretical assumptions underlying prior research. Section 3
introduces a social psychology perspective of corporate annual reporting. Section 4
outlines the research questions, hypotheses and the research method. Section 5
discusses the results and Section 6 concludes the paper.
2. THEORETICAL BASIS OF PRIOR RESEARCH
Prior research regards managers as rational, self-interested decision-makers and social
interaction with firm outsiders by means of corporate reporting is regarded solely in
terms of market exchange (Mouck, 1995). Impression management entails managers
opportunistically taking advantage of information asymmetries. Managers use the
discretion inherent in corporate narrative reporting by means of manipulating the
presentation and disclosure of information in order to “distort readers’ perceptions of
corporate achievements” (Godfrey et al., 2003, p. 96). Similar to earnings
management, impression management is viewed as constituting an inconsistency
between the managerial view of organisational performance and the view conveyed
publicly in corporate narrative documents (Healy and Wahlen, 1999, p. 368).
Corporate narrative documents are considered to be potential impression management
vehicles which can be used by managers to present a self-interested view of corporate
performance (Bettman and Weitz, 1983; Staw et al., 1983; Abrahamson and Park,
1994; Beattie and Jones, 2000; Clatworthy and Jones, 2006; Mather et al., 2000).
Impression management involves emphasising positive organisational outcomes
(enhancement) or obfuscating negative organisational outcomes (concealment), for
example, by including (more favourable) pro forma earnings numbers in corporate
narratives or by displaying positive organisational outcomes more prominently than
negative organisational outcomes (e.g., by means of positioning or highlighting). As
negative organisational outcomes give rise to conflicts of interest between managers
and shareholders, managers are assumed to be prompted to manipulate outsiders’
perceptions of and decisions on financial performance and prospects, i.e., to engage in
impression management (Aerts, 2005). Managerial motives may include benefitting
from increased compensation, particularly via managerial stock options (Adelberg,
1979; Rutherford, 2003; Courtis, 2004a).
Some impression management studies are either explicitly or implicitly based on a
social psychology perspective. Impression management is viewed as a self-serving
bias entailing, for example, the attribution of positive organisational outcomes to
internal factors (taking responsibility for good performance) and of negative
organisational outcomes to external circumstances (assigning blame for bad
performance) (Aerts, 1994, 2001; Clatworthy and Jones, 2003). Self-serving bias is
explained by reference to attribution theory (Heider, 1958; Jones and Davis, 1965;
Kelley, 1967) which is concerned with people’s explanations of events. Research
suggests that, in an interactive context, people’s attribution of actions and events is
biased in the sense that they take credit for success and deny responsibility for failure
(Knee and Zuckerman, 1996). Although prior research often acknowledges the social
psychology roots of impression management in the form of performance attributions,
the analysis tends to be carried out within an economics-based framework with
managers acting as rational utility maximising individuals. We argue that self-serving
bias may constitute a social bias resulting from the accountability context inherent in
5
6. the corporate reporting process. What is more, prior research regards managerial
corporate reporting behaviour as characterised by prospective rationality. This means
that narrative disclosures are regarded as the result of purposeful, goal-directed
behaviour, either aimed at providing useful incremental information or at providing
misleading information (impression management). However, Aerts (2005) argues that
corporate annual reporting may be characterised by retrospective rationality which
involves making sense of actions and events that have already occurred.
3. A SOCIAL PSYCHOLOGY PERSPECTIVE OF CORPORATE ANNUAL
REPORTING
The social psychology literature regards impression management as consisting of two
different processes, namely impression motivation and impression construction
(Leary and Kowalski, 1990). Impression motivation is concerned with the
circumstances which motivate individuals to engage in impression management.
Impression construction entails “choosing the kind of impression to create” and
“deciding how [to] go about doing so” (Leary and Kowalski, 1990, pp. 35-36).
We first discuss the social factors impacting on impression motivation which we
regard as embedded in, and dependent on, social relations. As impression
management involves “the process by which people attempt to control the
impressions others form of them” (Leary and Kowalski, 1990, p. 34), it is social in
character. This means that the social ‘presence’ of others is an essential part of
impression management. Thus, the determinants of impression management
behaviour may be located externally in the social context, as well as internally within
managers. As impression management in a corporate reporting context occurs in the
(imagined) presence of outside parties, we regard it to be determined by the
accountability relationship between management and financial and non-financial
stakeholders.1
We then focus on impression construction which involves constructing public images
that are either (i) a reflection of one’s self-image or (ii) images which are inconsistent
with one’s self-concept (Leary and Kowalski, 1990, p. 40). The former entails
managers using corporate annual documents to present an accurate (i.e., consistent
with an overall reading of the annual report), but favourable view of organisational
outcomes, whereas the latter entails “presenting images that are…not accurate”
(Leary et al., 1994, p. 461). This is referred to as self-presentational dissimulation
(Leary and Kowalski, 1990, p. 40). In a corporate annual reporting context, it entails
the managerial construction of public images of managerial actions and events that are
inconsistent with the way management may view these actions and events. We
introduce a new content analysis approach pioneered by psychology research which
focuses on the linguistic indicators of the psychological processes underlying
involved in self-presentational dissimulation.
3.1 Accountability, impression motivation, and retrospective sense-making
Schlenker et al. (1994, p. 634) defines accountability as “the condition of being
answerable to audiences for performing up to certain standards, thereby fulfilling
1
This implies a wide concept of accountability which views firms as reacting to the concerns of all
external parties (Stanton and Stanton, 2002).
6
7. responsibilities, duties, expectations, and other charges”. On the one hand,
accountability entails the obligation of one party to provide explanations and
justifications for its conduct to another party. On the other hand, it involves the first
party’s behaviour being subject to the scrutiny, judgment and sanctioning of the
second party.
According to Schlenker (1997), accountability involves three components which
affect judgement and decision-making in different ways, namely (1) the inquiry
component, (2) the accounting component, and (3) the verdict component. The
inquiry component entails anticipating or submitting to an inquiry by an audience who
evaluates one’s actions and decisions in relation to specific prescriptions. The
accounting component involves presenting one’s version of events. This gives the
individual the opportunity to describe, document, interpret, and explain relevant
information with the purpose of constructing a personal account of events and
providing reasons for their occurrence. The verdict component entails the audience
delivering a verdict. This comprises both a judgment of the individual and the
application of either social and material rewards or sanctions. Thus, the experience or
anticipation of an evaluative appraisal is crucial to the concept of accountability.
Frink and Ferris (1998), who apply the concept of accountability in organisational
research, establish the link between accountability and impression management. They
argue that, in an accountability context, individuals engage in impression management
in anticipation of an evaluation of their conduct. Impression management thus
constitutes a way of influencing the impressions and decisions of relevant parties in
order to win rewards and avoid sanctions. Thus, conditions of accountability foster
impression management.
Managerial behaviour in the corporate reporting process can also be analysed in the
context of an accountability framework. Managers are accountable to outside parties
for their decisions and actions, with the annual report serving as an accountability
mechanism to react to the concerns of external parties (Stanton and Stanton, 2002, p.
492). Thus, impression management can be conceptualised as arising from the inquiry
component of corporate reporting with managers engaging in impression management
in anticipation of an evaluation of their actions and decisions (primarily) by
shareholders. Managers are assumed to engage in impression management to
counteract undesirable consequences of information releases.2 Figure 1 illustrates the
role of corporate narrative reporting in the accountability process.
2
These take the form of unfavourable analyst reports and credit ratings, and ultimately, negative share
price movements on the one hand; and loss of stakeholder support and social legitimacy on the other
hand. As corporate reporting takes place in a social context, it is influenced by social norms and rules.
This requires a shift to substantive rationality which is concerned with ideals, goals and ends which are
pursued for their own sake, such as equality, justice, and freedom (Weber, 1968). Substantive
rationality addresses mainly social and environmental issues, such as fair trade, equality in the
workplace, and pollution. Substantive rationality is a rationality of ends which involves applying
appropriate reason to achieve these ends. Thus, impression management is regarded as a managerial
attempt to gain or restore social legitimacy by aligning the company’s norms and values with those of
society by decoupling or symbolic management. In this case, impression management constitutes an
inconsistency between the firm’s actual and professed norms and values.
7
8. Figure 1: Role of corporate narrative reporting in the accountability process
3 Delivery of
judgement/verdict
e.g. Buying / selling shares
Restoring social legitimacy
Individual Jury
2 Accounting: presenting (Shareholders
(Management) one’s version of events & Stakeholders)
Impression management /
Retrospective sense making
Anticipation of inquiry
(information inductance)
Key:
Represents the direction of influence (i.e. either from management to shareholders or
from shareholders to management).
___ Represents the direction of influence conceptualised in the mainstream view of the
corporate reporting process, i.e. the interaction between firm insiders and outsiders by
means of market exchange.
------ Represents the unobservable psychological processes underlying impression management
resulting from the (imaged) presence of (primarily) shareholders, the recipients of the
annual report.
The process of anticipating the reactions of information recipients to managerial
disclosures is referred to as ‘information inductance’ (Prakash and Rappaport 1977).
Impression management can thus be regarded as resulting from the behavioural
impact of information on managers who aim to control the feedback effects of
reported information by means of altering it before it is released. Alternatively, Aerts
(2005) argues that the accountability context of corporate annual reporting prompts
managers to engage in retrospective sense-making. This concept originates in Weick’s
(1995) work on organisational sense-making and refers to the interpretation of events
that have already occurred. Managers may thus use corporate annual report
documents to proactively shape shareholders’ and stakeholders’ perceptions of
organisational outcomes and events (impression management) and/or to
retrospectively provide an account of events (retrospective sense-making).
Retrospective sense-making is contrary to the goal-seeking perspective of economic
rationality which is generally assumed to drive managerial behaviour and thus
corporate narrative reporting. The conditions of ‘ex post’ accountability in corporate
annual reporting, which is characterised by managers anticipating readers’ reactions,
may give rise to impression management and/or retrospective sense-making.
Impression management may take the form of presenting an inaccurate view of
organisational outcomes (self-presentational dissimulation) and/or an accurate, but
favourable, view of organisational outcomes (enhancement). Whereas self-
presentational dissimulation entails “creat[ing] an impression at variance with an
overall reading of the [annual] report” (Stanton et al., 2004, p. 57), impression
management by means of enhancement involves creating an impression consistent
with an overall reading of the annual report. Figure 2 illustrates the impact of
accountability on managerial corporate annual reporting behaviour as impression
management and/or retrospective sense-making.
8
9. Figure 2: The impact of accountability on managerial corporate annual reporting behaviour
Accountability
(i) Impression (ii) (c) Retrospective
management sense-making
Constructing an inaccurate Constructing an accurate, but
impression of organisational favourable, impression of
outcomes organisational outcomes
(at variance with an overall (consistent with an overall
reading of the annual report) reading of the annual report)
(a) self-presentational (b) Enhancement
dissimulation (emphasis of positive
(obfuscation of negative organisational outcomes)
organisational outcomes)
3.2 Impression construction, self-presentational dissimulation and the
psychological dimension of word use
We assume that the concerns of information providers about the consequences of the
information recipients’ actions will manifest themselves verbally. We focus on the
linguistic indicators of the psychological processes underlying the construction of
images which are inconsistent with one’s self-concept. Previous studies have focused
on specific impression management strategies adopted to obfuscate negative
organisational outcomes, thereby constructing an impression of organisational
outcomes at variance with an overall reading of the annual report, in particular
reading ease manipulation and rhetorical manipulation (Merkl-Davies and Brennan,
2007).
Social psychology is a discipline that uses scientific methods “to understand and
explain how the thoughts, feelings and behaviours of individuals are influenced by the
actual, imagined or implied presence of other human beings” (Allport, 1954, p. 5).
The underlying assumption is that unobservable processes, such as thoughts, feelings,
and beliefs are the psychological dimension of social behaviour and that these can be
inferred from behaviour. Behaviour includes actions and non-verbal behaviour, such
as body language, facial expressions, gestures, and language.
The method of analysis chosen is based on the assumption that the way people
express themselves conveys psychological information (Pennebaker et al., 2003).
Language is viewed as a psychological marker which can be analysed by counting the
occurrence of specific words and word categories which capture the way content is
expressed (Newman et al., 2003). It involves word counts of grammatical features,
9
10. such as personal pronouns (e.g., I, my, mine) and conjunctions (e.g., and, but,
although) or psychologically derived linguistic dimensions, such as emotion words
(e.g., wonderful, exciting) or achievement-related words (e.g., try, goal, win). Word
count strategies “are based on the assumption that the words people use convey
psychological information over and above their literal meaning and independent of
their semantic context” (Pennebaker et al., 2003, p. 550).
Pennebaker et al., (2003) observe that three classes of word categories are implicated
in deception (what we call self-presentational dissimulation) – pronoun use, emotion
words and markers of cognitive complexity (e.g., exclusive words). Newman et al.,
(2003) find a relatively consistent linguistic profile for deception, based on five word
categories: (1) first person singular pronouns (liars avoid statements of ownership,
disassociate themselves from the text), (2) third person pronouns, (3) negative
emotion words (arising from discomfort and guilt associated with lying), (4) exclusive
words (associated with cognitive complexity) and (5) motion verbs (negatively
associated with cognitive complexity) (liars tell less complex stories). Verbosity, i.e.,
the amount of words used, is also found to be a predictor of deception (lying is
associated with less detail, thus resulting in shorter communication) (DePaulo et al.,
2003; Burgoon et al., 2003; Vrij at al., 2000).
Following this research, we employ a content analysis approach which is based on the
linguistic indicators of self-presentational dissimulation in the form of six word
categories, namely (1) word count, (2) first person pronouns, (3) third person
pronouns, (4) positive emotion words, (5) negative emotion words, and (6) words
relating to underlying complex cognitive processes (Burgoon et al., 1996; 2003;
Newman et al., 2003; Pennebaker et al., 2003). These convey psychological
information on the underlying emotional state of individuals engaged in constructing
public images which are inconsistent with their self-concept. They “are the result of
anxiety, negative emotional states, and cognitive demand” (Carlson et al., 2004, p. 7)
which go hand-in-hand with conveying “messages and information knowingly
transmitted to create a false impression or conclusion” (Burgoon and Nunamaker,
2004, p. 1). The intention is to construct an instrument measuring the verbal
manifestations of managerial concern about the impact of narrative disclosures on
information recipients’ actions.
However, psychology research based on word use shows the content categories used
to analyse self-presentational dissimulation to be indicative of a variety of other
psychological processes and behaviour, including gender, and physical and emotional
health (Campbell and Pennebaker, 2003). What is more, pronouns and adjectives
(with both positive and negative connotations) are amongst the most commonly used
textual elements in content analysis (Macnamara, 2003, p. 17) to analyse a variety of
phenomena, including impression management. Baker and Kare (1992), Kohut and
Segars (1992), Rutherford (2003), Clatworthy and Jones (2006), and Li (2008) use
document length as a proxy for reading difficulty. Abrahamson and Park (1994),
Abrahamson and Amir (1996), Smith and Taffler (2000), Lang and Lundholm (2000),
Clatworthy and Jones (2003), Rutherford (2005), Henry (2006, 2008), Matsumoto et
al. (2006), and Davis et al. (2008) use positive and negative keywords as a proxy for
the enhancement of positive organisational outcomes (managerial optimism and
pessimism).
10
11. We therefore argue that the content categories used as proxies for self-presentational
dissimulation can also be interpreted as indicators of managerial enhancement of
positive organisational outcomes or managerial retrospective sense-making.
Bloomfield (2008) puts forward a similar argument in his discussion of Li’s (2008)
paper on impression management in the form of reading ease manipulation. He states
that word and sentence length and document length may be interpreted as indicators
of the complexity of the news to be described, rather than obfuscation by means of
reading difficulty, with negative financial performance requiring more complex and
detailed explanations than positive financial performance.
4. HYPOTHESES, DATA AND METHOD
This section discusses the research questions, the research method, including sample
selection, data sources used, measurement of the independent variables, and the
statistical methods applied in analysing the data.
4.1 Hypotheses
The use of impression management in a corporate reporting context has been found to
be causally linked to various firm characteristics, including organisational outcomes,
firm size, and industry sector classification. Research in social psychology suggests
that the strength of organisational actors’ motivations to engage in impression
management depends on (1) the goal-relevance of the impressions (including the
maximisation of social and material outcomes, the maintenance and enhancement of
self-esteem, and identity creation) (2) the value of the desired outcomes, and (3) the
discrepancy between one’s desired and current social image (Leary and Kowalski,
1990). Negative organisational outcomes can thus be regarded as a trigger for
organisational actors to engage in impression management. We expect firms with
negative organisational outcomes to be more likely to present a public image of
organisational performance which is inconsistent with the managerial view of
organisational performance than firms with positive organisational outcomes.
Therefore, we expect self-presentational dissimulation to be directly associated with
negative organisational outcomes.
H1a: Firms reporting negative organisational outcomes in their financial statements
are more likely to engage in self-presentational dissimulation than firms
reporting positive organisational outcomes.
However, managers may use corporate annual report documents to present an
accurate (i.e., consistent with an overall reading of the annual report), but favourable,
view of organisational outcomes (enhancement of positive organisational outcomes).
Thus, we expect managers to emphasise positive organisational outcomes, regardless
of their financial performance. We express this hypothesis in the null form.
H1b: There is no difference in impression management by means of enhancement of
positive organisational outcomes between firms reporting positive
organisational outcomes and firms reporting negative organisational outcomes
in their financial statements.
What is more, the accountability context of corporate annual reporting may prompt
managers to engage in retrospective sense-making manifesting itself in “ex post
explanations or restatements of organizational outcomes and events” (Aerts, 2005, p.
11
12. 497). Under conditions of ex post accountability, we thus expect an increase of
retrospective sense-making in the case of negative organisational outcomes.
H1c: Firms reporting negative organisational outcomes in their financial statements
are more likely to engage in retrospective sense-making than firms reporting
positive organisational outcomes.
The goal relevance of impressions also depends on the publicity of the individual’s
behaviour and on the individual’s dependency on others for valued outcomes.
Publicity is “a function of both the probability that one’s behavior will be observed by
others and the number of others who might see or learn about it” (Leary and
Kowalski, 1990, p. 38). If an individual depends on others for valued outcomes, the
impressions that individuals make on others become more important and the
individual’s motivation to engage in impression management becomes stronger. As
large firms are more in the public eye than small firms in the sense that they have a
higher analyst following and a wider media exposure, they may be more likely to
present a public image of organisational outcomes inconsistent with the managerial
view of organisational outcomes. Conversely, large firms are subject to greater
scrutiny and are therefore more likely to be found out and sanctioned for engaging in
self-presentational dissimulation and impression management (Abrahamson and Park,
1994). Therefore, we do not make any predictions concerning the direction of
association with firm size.
H2a: There is no difference in self-presentational dissimulation between firms of
different sizes.
H2b: There is no difference in impression management by enhancement between
firms of different sizes.
H2c: There is no difference in the sense-making activities of managers between firms
of different sizes.
We further assume that there is no difference in the impression management
behaviour and the sense-making behaviour of firms belonging to different industries.
H3a: There is no difference in self-presentational dissimulation between firms in
different industries.
H3b: There is no difference in impression management by enhancement between
firms in different industries.
H3c: There is no difference in the sense-making activities of managers between firms
in different industries.
4.2 Population and sample
The population from which the sample is selected comprises all UK domiciled
companies listed on the London Stock Exchange on 30 April 2004 (1,983 companies).
The aim of sample selection is to derive a sample comprising a variety of industries
and firm sizes. The companies were first grouped into sectors, based on the Dow
Jones Market Sector classifications. In order to generate a large enough sample, the
three sectors with the highest number of companies were selected for analysis
(Financial Services companies are excluded due to their unique features). The three
resulting sectors are Consumer Cyclical (CYC; n = 360), Technology (TEC; n = 193),
12
13. and Industrial (IDU; n = 331).3 An initial sample of 93 firms was then selected
comprising 31 companies from each of the three industries. The initial sample size of
93 was chosen as sufficiently large to permit statistical testing. These were selected
using systematic sampling to ensure heterogeneity of firm sizes. For this purpose, the
companies in each industry sector were ranked according to size (end of year market
capitalisation 2002 in £million) and sample companies were chosen at regular
sampling intervals throughout the size ranges. The sampling interval is the ratio N/n,
i.e., where N represents the population and n the desired sample size (i.e., 31) in each
industry sector. The full selection process is documented in Table 1.
Table 1: Sample selection
Consumer Technology Industrial Total
No. firms No. firms No. firms No. firms
Total population in sector 360 193 331 884
Eliminations
Market capitalisation not available/large (18) (5) (8) (31)
change in market capitalisation
Missing values (5) (17) (11) (33)
Non-calendar years (3) (7) (7) (17)
Total final population in sector 334 164 305 803
Sample selected 31 31 31 93
The sample size of 93 firms is small. Other than Li (2008), most prior papers in this
field have small sample sizes, due to the labour-intensive process of collecting,
preparing and analysing textual data.
4.3 Data sources and textual analysis software
The annual report chairman’s statement is a tried and tested medium for the
investigation of impression management in narrative corporate report sections (Jones,
1988; Smith and Taffler, 1992a, 1992b, 1995, 2000; Clatworthy and Jones, 2001,
2006; Sydserff and Weetman, 2002; Courtis, 1998, 2004a). Its relatively short length
makes it particularly suitable for content analysis.
The chairmen’s statements were obtained by downloading the 2002 annual reports in
pdf format. These would have been the first annual reports post-Enron when financial
reporting and the quality of accounting information were the subject of considerable
public attention worldwide. After deleting photographs and their captions, images,
charts, graphs, tables, forms of address (Dear shareholder), and greeting (Yours
faithfully), the chairmen’s statements were converted into computer readable text
format.
3
The industry classification Consumer Cyclical includes firms operating in the subsectors of
advertising, entertainment and leisure, publishing, clothing and fabrics, etc.; Industrial includes firms
operating in the subsectors of building materials, pollution control/waste management, electrical
components and equipment, etc.; Technology includes firms operating in the subsectors of aerospace
and defence, computers, office equipment, etc.
13
14. We use Linguistic Inquiry and Word Count (LIWC), an automated text analysis
program developed by psychologists for the purpose of analysing linguistic style, to
measure self-presentational dissimulation. Its external validity has been extensively
tested (Pennebaker and Francis, 1996). The program analyses written samples of text
on a word-by-word basis and calculates the number of words that match pre-defined
word categories which are then hierarchically subdivided into 70–80 dimensions
(depending on the version of the software used) (see Pennebaker et al., 2007 for full
details of how the software operates).4 This program has been used in numerous
studies to examine linguistic manifestations of psychological processes and
behaviour, such as personality characteristics of US presidential candidates (Slatcher
et al., 2007), demographic differences, such as age and gender (Pennebaker and
Stone, 2003), emotional issues, such as bereavement and depression (Gill and
Oberlander, 2003; Pennebaker and King, 1999), and self-presentational dissimulation
(Newman et al., 2003; Burgoon et al., 2003; Hancock et al., 2008).
4.4 Measurement of dependent variables
Measurement of the three dependent variables in this research is presented below.
4.4.1 Self-presentational dissimulation
We adapt a content analysis approach based on the linguistic style associated with
self-presentational dissimulation developed by Newman et al. (2003). Research in
psychology finds the texts of individuals who engage in deception to show the
following linguistic characteristics: (1) They are shorter (DePaulo et al., 2003;
Burgoon et al., 2003; Vrij et al., 2000), (2) they contain fewer self-references
(Newman et al., 2003), (3) they contain fewer references to others (Newman et al.,
2003), (4) they contain more positive emotion words (Newman et al., 2003; Burgoon
et al., 2003; Zhou et al., 2004), (5) they contain more negative emotion words
(Newman et al., 2003; DePaulo et al., 2003), and (6) they contain fewer words
indicative of cognitive complexity (Newman et al., 2003). Deception goes hand-in-
hand with providing less detail in the account of events. As the use of self-references
in the form of first-person is a “subtle proclamation of one’s ownership of a
statement” (Newman et al., 2003, p. 666), individuals engaged in deception avoid the
use of self-references as a way of distancing themselves from their stories and to
avoid taking responsibility for their behaviour. The increased use of emotion words is
a reflection of the discomfort experienced when engaging in deception (Newman et
al., 2003, p. 666). Finally, deception consumes cognitive resources which results in
less complex stories (Newman et al., 2003, p. 666). This manifests itself, amongst
others, in a less complex sentence structure, less causation words (e.g., because,
cause, effect), and fewer words expressing the ability to think, learn and understand
(e.g., think, know, consider).
This is the first study applying Newman et al.’s (2003) content analysis approach in a
corporate reporting context. Gupta and Skillicorn (2006, p. 2), who use the approach
to analyse a large corpus of Enron email messages, find that “the model captures …
messages in which there seems to be a dichotomy between the overt meaning of the
email and the mindset of the sender”. They conclude that it captures ‘spin’, i.e., “the
attempt by authors to convey something they themselves do not (quite) believe”.
4
For example, the word ‘optimistic’, falls into five of the 70-80 dimensions, namely ‘optimism’,
‘positive emotion’, ‘overall affect,’ ‘words longer than six letters’ and ‘adjective’.
14
15. Newman et al.’s (2003) content analysis approach is based on the behaviour of
individuals, whereas the content of corporate narrative documents is the result of
decision behaviour of a group of people, primarily the firm’s management (Clarke
and Murray, 2000). The assumption that the behaviour of individuals and groups of
individuals is the same is open to question.
For the six linguistic indicators of self-presentational dissimulation we make use of
four dimensions from LIWC, (1) Word count (LIWC: log word count5), (2) positive
emotion words (LIWC: positive emotion), (3) negative emotion words (LIWC:
negative emotion), and (4) cognitive complexity (LIWC: cognitive processes). We
then create custom dictionaries for the two remaining linguistic indicators, namely (5)
self-reference (this custom dictionary contains three word categories - first person
plural pronouns (i.e., we, us, our, ours, ourselves), the Group, and the respective
company name), and (6) reference to others (this custom dictionary contains four
words – industry, sector, competitor, and rival).6 Following Newman et al., (2003)
and Slatcher et al., (2007) the measures for each indicator are subsequently converted
to z scores. A z score is a standardised measure which is derived by considering the
distance in terms of standard deviation from the mean of the raw score. The individual
z scores are summed using the following algorithm:
Self-presentational dissimulation = – zWord Count – zSelf-reference – zReference to
others + zPositive Emotion + zNegative Emotion – zCognitive Complexity.7
We assume that the higher the score, the more likely it is that a company is portraying
a public image of organisational outcomes which is inconsistent with the managerial
view of organisational outcomes. Table 2 outlines the six linguistic indicators of self-
presentational dissimulation for chairmen’s statements, their abbreviation, examples
of their application in practice, data sources and measurement.
5
Because of the skewness in the number of words across firms and some extreme values we use the
natural logarithm, rather than the raw word count.
6
It is not meaningful to combine the output for all six indicators of self-presentational dissimulation
into a single score because first of all, they are on different scales, i.e., the Word Count measure is an
absolute measure and the remaining variables are percentage measures. What is more, their direction of
association is not in the same direction.
7
Z-scores for each linguistic indicator are calculated by subtracting the sample mean (µx) from each
value (x) and then dividing by the standard deviation (σx), i.e. zx = (x - µx)/ σx.
15
16. Table 2: Linguistic indicators of self-presentational dissimulation in chairmen’s statements
Linguistic indicator Examples Data source Measurement
1. Word count ---- LIWC log of total word
count in text
2. References to self 1st person plural: we, us, Custom dictionary % of total word
our, ours, ourselves; the count in text
Group; name of the
company
3. References to others Industry, sector, Custom dictionary % of total word
competitor(s), rival(s) count in text
4. Positive emotion words Exciting, win LIWC: Positive % of total word
emotion count in text
5. Negative emotion words Difficult, disappointing, LIWC: Negative % of total word
loss emotion count in text
6. Markers of cognitive Cognitive processes LIWC: Cognitive % of total word
complexity processes count in text
Note: LIWC: Linguistic Inquiry and Word Count, the content analysis program used in this study
Table 3 provides the descriptive statistics for the six linguistic indicators and the
summary z score for self-presentational dissimulation for our sample of UK
chairmen’s statements. Its shows marked differences in mean values between positive
emotion words (3.314%) and negative emotion words (0.857%). This suggests that,
on average, chairman’s statements tend to contain four times as many positive
emotion words (e.g., exciting, win) than negative emotion words (e.g., difficult,
disappointing, loss). This has been referred to as the ‘Pollyanna effect’ (Hildebrandt
and Snyder, 1981). However, only association tests can ascertain whether this
prevalence to ‘enhance the story’ (Courtis, 2004a, p. 293) occurs regardless of
financial performance.
Table 3: Descriptive statistics of linguistic indicators of self-presentational dissimulation
Variable N Mean Median StDev Minimum Maximum Q1 Q3
1. Word count (absolute total number) 93 823 806 1.876 161 3,801 530 1,278
1. Word count (natural log total words) 93 6.713 6.692 0.629 5.081 8.243 6.273 7.153
2. References to self (%) 93 3.692 3.800 1.460 0.600 7.770 2.785 4.775
3. References to self others (%) 93 0.240 0.190 0.256 0.000 1.460 0.000 0.355
4. Positive emotion words (%) 93 3.314 3.340 1.117 1.060 7.720 2.480 3.985
5. Negative Emotion words (%) 93 0.857 0.730 0.572 0.000 3.180 0.460 1.125
6. Markers of Cognitive Complexity (%) 93 3.430 3.390 0.891 0.000 5.760 2.960 3.850
Self-presentational dissimulation z score 93 -0.002 1.541 2.668 -6.726 7.905 -1.565 1.485
Key: % = % of total word count in text
4.4.2 Impression management by means of enhancement
If managers use corporate narratives to provide useful incremental information, then
positive organisational outcomes should be associated with the use of positive key
16
17. words and negative organisational outcomes with the use of negative key words
(Abrahamson and Amir, 1996; Henry, 2006; Davis et al., 2008). However, if
managers use corporate annual report documents to enhance positive organisational
outcomes, then we expect to see no difference in the use of positive key words
between firms reporting positive organisational outcomes and firms reporting
negative organisational outcomes (Smith and Taffler, 2000; Rutherford, 2005). We
use the LIWC content categories of positive and negative emotion words which
capture words with positive and negative connotations.8
4.4.3 Retrospective sense-making
Sense-making is assumed to manifest itself in an increase in cognitive complexity and
document length. Bloomfield (2008) uses document length as a proxy for cognitive
complexity. We use both document length (word count) and the LIWC content
category ‘cognitive processes’ which is characterised by causation and insight words
(e.g., because, think, know).
The linguistic indicators used as proxies for self-presentational dissimulation,
impression management by means of enhancement, and retrospective sense-making
(dependent variables), and their expected direction of association with organisational
outcomes, are summarised in Table 4.
Table 4: Dependent variable measures and predicted association with organisational outcomes
Self-presentational Impression management Retrospective
dissimulation (enhancement) sense-making
(H1a, H2a, H3a) (H1b, H2b, H3b) (H1c, H2c, H3c)
Association with negative
organisational outcomes
Linguistic indicator
1. Word count - Not applicable +
2. Self-reference - Not applicable Not applicable
3. Reference to others - Not applicable Not applicable
4. Positive emotion words + No difference Not applicable
5. Negative emotion words + + Not applicable
6. Cognitive complexity - Not applicable +
4.5 Data for independent variables
Three independent variables are tested in this research: financial performance in terms
of organisational outcomes, firm size, and industry classification. The database
Thomson One Banker-Analytics is used to download all the financial variables from
1999 to 2002, including data for the financial performance variables (i.e., total assets,
total sales, income before taxation and interest, the firm size variable (i.e., end of year
market-capitalisation) and the Dow Jones industry classification.
8
Alternatively, if managers use corporate annual report documents to obfuscate negative organisational
outcomes, then we expect to see no difference in the use of negative key words between firms reporting
positive organisational outcomes and firms reporting negative organisational outcomes.
17
18. 4.5.1 Organisational outcomes
Four different measures that distinguish positive and negative organisational
outcomes reported in the financial statements are used. Prior research predominantly
focuses on firm-specific and transitory aspects of financial performance, most
commonly positive/negative percentage change in earnings (Courtis, 1998;
Subramanian et al., 1993). In this study, two measures based on assets and sales
which capture more permanent aspects of financial performance in relation to the
firm’s competitive environment are also used.
Prior impression management research has used three categories of financial
performance measures, namely (1) accounting measures that are predominantly
percentage change in net income (Adelberg, 1979; Courtis, 1995, 1998, 2004a; Jones,
1988; Sydserff and Weetman, 2002; Rutherford, 2003; Li, 2008), (2) market-based
measures (Cassar, 2001), and (3) bankruptcy/survival measures (Smith and Taffler,
1992a, b). Following Subramanian et al. (1993), Courtis (2004a) and Smith and
Taffler (1992a, b), we treat financial performance as a dichotomous variable, i.e.,
either positive or negative organisational outcomes. We base these dummy variables
on four accounting measures which reflect different types of organisational outcomes.
These are summarised in Table 5.
Profit or Loss indicates whether the firm’s income (before interest and taxation) is
either positive or negative, taking the value of zero if an absolute net loss is reported
and a value of one otherwise. In this context, it is generally assumed that managers
normally seek to avoid reporting a loss (Hayn, 1995). Research in earnings
management has provided substantial evidence concerning such benchmark beating in
firms. In this study it is assumed that managers engage in self-presentational
dissimulation and retrospective sense-making when expectations cannot be achieved.
Earnings Increase or Decrease indicates whether the change in earnings between the
two years in question (2001 and 2002) is either positive or negative. In this case,
managers are assumed to seek to report results that improve upon last year’s
performance (Burgstahler and Dichev, 1997; Degeorge et al., 1999). The variable
takes a value of zero if there is a decrease in earnings, and a value of one otherwise.
Annual earnings may be influenced by a number of non-contemporaneous factors.
These would include corrections to past valuations and the prudent recognition of
current value-increasing activities whose income effect is deferred until its eventual
certain realisation in future periods. Therefore, we also consider a broader accounting-
based indicator of performance that provides a global measure of current activities,
i.e., sales. Revenue is a key measure of a firm’s economic activity. In prior research,
firm performance has been operationalised as sales growth rate relative to its industry
(Powell, 1996; Covey et al., 2006). Investment analysts use revenue to proxy the
entity’s current level of economic activity relative to past levels, and with its
competitors as part of their assessment of the firm’s financial performance. In this
context, it is assumed that negative sales growth and lower sales growth than the
firm’s competitors represent missed targets. Sales growth rate is reflected in the
dummy variable Relative Sales Increase or Decrease, which is an indicator of either
positive or negative growth in the total sales of a firm from 2001 to 2002, relative to
the rate of change in output in the overall industry. The variable takes a value of zero
if the percentage change in Sales is below the industry average, and one otherwise.
18
19. Finally, Relative Firm Growth captures the longer-term growth of a firm relative to its
industry by averaging the growth in both sales and total assets over a four year period
(1999-2003) and then adjusting for the industry mean. This is also treated as a 0,1
indicator, in this case taking the value of zero if firm growth is below the industry
average and one otherwise.
Table 5: Measurement of organisational outcomes
Proxy measure Definition Prior research
(1) Profit / Loss 1 EBIT ≥ 0 in Year 1; Subramanian et al. (1993)
0 EBIT < 0 in Year 1 Courtis (2004a)
Li (2008)
(2) Earnings Increase 1 Positive change in EBIT Year 0 to Year 1 Subramanian et al. (1993)
/ Decrease 0 Negative change in EBIT Year 0 to Year 1 Courtis (2004a)
(3) Relative Sales 1 Positive sales growth relative to industry from Year Powell (1996)
Increase / Decrease 0 to Year 1 Covey et al. (2006)
0 Negative sales growth relative to industry from
Year 0 to Year 1
(4) Relative Firm 1 Positive long-term growth averaged over sales and Current study
Growth assets and compared to industry, four years from
Year -2 to Year +1
0 Negative long-term growth averaged over sales and
assets and compared to industry, four years from
Year -2 to Year +1
Key: EBIT - Earnings Before Interest and Tax
Table 6 shows the number of companies in the sample reporting positive and negative
organisational outcomes across the four proxy outcomes measures. It can be seen that
there is an approximate 3:2 split between the two groups across all four measures.
Table 6: Categorisation of sample firms by organisational outcome
Positive organisational Negative organisational Total
outcome outcome
No. firms No. firms No. firms
(1) Profit or Loss 52 41 93
(2) Earnings Increase/Decrease 55 38 93
(3) Relative Sales Increase/Decrease 57 36 93
(4) Relative Firm Growth 59 34 93
4.5.2 Firm size
Table 7 shows the descriptive statistics of firm size, measured as the natural logarithm
of market capitalisation in 2002, for the whole sample. The market values themselves
range from £0.164m to £6,124m with median value of £43.38m.
19
20. Table 7: Descriptive statistics of firm size
Variable N Mean Median StDev. Min Max Q1 Q3
Size (£m) 93 45.833 43.380 8.491 0.164 6,124.179 11.302 223.632
LogSize 93 3.825 3.770 2.139 -1.810 8.720 2.425 5.410
Size by industry (£m)
Consumer 31 85.541 58.557 8.593 1.259 6124.179 13.874 601.845
Technology 31 16.827 22.874 6.639 0.164 749.945 5.641 47.942
Industrial 31 66.954 94.632 7.838 1.221 3261.688 7.614 242.257
4.5.3 Industry
Impression management may be affected by the industry in which the company
operates (Aerts, 2005). In order to control for variability in the three dependent
variables across industries, the sample was divided into three broad industry sectors
based on the Dow Jones Market Sector classifications (Consumer Cyclical,
Technology, and Industrial).
4.6 Statistical analysis
We use ordinary linear regressions to examine the relationship between the three
dependent variables and firm characteristics. The specification of the model is as
follows:
(a) Self-presentational
dissimulation
(b) Impression = β0 + β1 (positive/negative organisational outcomes dummy)
management + β2 (Firm size) + β3 (Industry sector dummies) + u1
(c) Retrospective (unexplained residual)
sense-making
5. RESULTS
We test the three hypotheses set out earlier on the relationship between (a) self-
presentational dissimulation (i.e., the summary z-score), (b) impression management
by means of enhancement, and (c) retrospective sense-making and (i) organisational
outcomes, (ii) firm size, and (iii) industry. Table 8 presents the results of regressing
the summary z-score on the four different measures of financial performance (Table 8,
column 1). In all the regressions firm size and industry classification are included as
control variables. Our findings do not support hypothesis H1a which predicts that
firms reporting negative organisational outcomes engage self-presentational
dissimulation which entails constructing a public image of managerial actions and
events that is inconsistent with the way management views these actions and events.
However, we find that the chairmen’s statement of firms operating in the Industrial
sector use significantly less self-presentational dissimulation (for the four
organisational measures the coefficients are respectively: -2.34**; -2.50**; -2.64***;
-0.19) than firms operating in the Consumer Cyclical and the Technology sector, a
finding that we cannot currently explain.
20
21. In order to investigate the complementary hypotheses regarding managerial corporate
annual reporting behaviour (in the form of impression management by means of
enhancement and in the form of retrospective sense-making), we also regress each
linguistic indicator on the four measures of financial performance separately (Table 8,
columns 2-7).9 We find that firms which report negative organisational outcomes use
significantly less positive emotion words (for the four organisational measures the
coefficients are respectively: 2.69***; 2.89***; 0.68; 0.13) and significantly more
negative emotion words (coefficients -2.79***; -2.99***; -3.26***; -4.55***) than
firms which report positive organisational outcomes. This suggests that managers do
not use corporate narrative annual report sections to present an inaccurate (i.e., at
variance with an overall reading of the annual report) view of organisational
outcomes, but rather to explain or reinforce “the impression created elsewhere by raw
figures” (Courtis, 1995, p. 14).10 This finding supports hypothesis H1b which predicts
no difference between impression management by means of enhancement between
firms reporting positive and negative organisational outcomes.
Further, the chairmen’s statements of firms reporting negative organisational
outcomes are characterised by more linguistic indicators of cognitive complexity than
those of firms reporting positive organisational outcomes (coefficients -3.51***; -
0.61; -2.10**; -3.13***). This suggests that explaining losses and negative sales
growth and negative firm growth compared to competitors requires more cognitive
resources. This manifests itself semantically in more causation words and
grammatically in a more complex sentence structure than explaining profits, and
positive sales growth and positive firm growth compared to competitors. This finding
supports the retrospective sense-making hypothesis H1c.
This suggests that in an annual reporting context characterised by “ex post
accountability” (Aerts, 2005, p. 497), “overall financial performance [can] be
conceived as a primary content variable around which (and not necessarily about
which) a number of different accounting (and non-accounting) stories [can] be built”
(ibid, p. 496). Thus, corporate annual report documents may not be the outcome of
proactive, purposeful, and goal directed managerial decision-making (prospective
rationality), but rather the result of retrospective sense-making (retrospective
rationality) characterised by managers making “interpretive readings of an
organisational situation” (Boland, 1993, p. 125) under conditions of accountability.
This manifests itself in “ex post explanations or restatements of organizational
outcomes and events” (Aerts, 2005, p. 497).
In contrast to Bloomfield (2008), we find positive financial performance (in the form
of sales increase and positive firm growth relative to sector average) to result in an
increase in document length (measured as word count) (coefficients 2.92***; 2.04**).
This suggests that firms which outperform their competitors in terms of sales and
asset growth provide longer corporate narrative annual report documents than firms
whose sales and assets growth is worse than the sector. Bloomfield (2008) regards
9
We also run the same regressions using the individual z-scores for the six linguistic indicators. The
results are not reported, but are of a similar magnitude and statistical significance to those of the un-
standardised linguistic indicators reported in Table 8 (columns 2-7).
10
It also refutes the ‘Pollyanna effect’ (Hildebrandt and Snyder, 1981, p. 6) which suggests that
managers introduce positive bias into corporate narrative documents, irrespective of financial
performance.
21
22. descriptions of negative financial performance to be more complex and thus lead to an
increase in document length. However, our results suggest the opposite, namely that
managers have the tendency to enhance positive organisational outcomes by
describing them in more detail than negative organisational outcomes. This finding
contradicts the retrospective sense-making hypothesis H1c and supports the impression
management by enhancement hypothesis H1b.
Further, firms operating in the technology sector (coefficients 2.36**; 2.47**; 2.36**;
2.79***) and the industrial sector (coefficients 3.87***; 4.15***; 4.15***; 4.23***)
also provide more cognitively complex chairmen’s statements than firms operating in
the consumer cyclical sector. This may be an indication of the greater complexity of
the subject matter compared with firms operating in the consumer cyclical sector.
Thus, hypothesis H3c is not supported, with evidence of significant differences in use
of the linguistic cognitive complexity indicator by industry sector.
Further, we find the chairmen’s statements of large firms to contain more self-
references (coefficients 4.13***; 4.26***; 4.18***; 4.13***), more positive emotion
words (coefficients 1.35; 2.16**; 2.37**; 2.45**) and less negative emotion words
(coefficients -1.40; -2.24**; -2.12**; -1.98**) than those of small firms. This suggests
that large firms may have a greater tendency to use their corporate annual report
documents as impression management vehicles by putting the best part of themselves
into public view (Leary and Kowalski, 1990, p. 40) than small firms. Thus, our
findings support hypothesis H2b. The increased use of the company name and the first
person plural, combined with the tendency to use rather more words with positive
than negative connotations, suggests that large firms may use their chairmen’s
statements more for brand-building than small firms.
In summary, our results suggest that firms do not use chairmen’s statements to create
an impression at variance with an overall reading of the annual report (self-
presentational dissimulation). We find that large firms are more likely to portray an
accurate (i.e., consistent with an overall reading of the annual report), albeit
favourable image of organisational outcomes. Further, we find that negative
organisational outcomes do not prompt managers to engage in self-presentational
dissimulation, but rather to engage in retrospective sense-making by means of
“drawing together a series of events in order that they make sense in relation to one
another” (Crossley, 2000, p. 535). This manifests itself linguistically in the form of a
more complex grammatical sentence structure and more causation and insight words
(e.g., because, think, know).
22
23. Table 8: Association between self-presentational dissimulation, impression management, and retrospective sense-
making and organisational outcomes (H1), firm size (H2) and industry sector (H3)
(a) Self-
Dependent presentational (b) Impression management (enhancement) (c) Retrospective
variables dissimulation sense-making
Dependent variable z-score Self- Reference Positive Negative Word Cognitive
measures reference to others emotion Emotion count complexity
Hypotheses tested (H1a, H2a, H3a) (H1b, H2b, H3b) (H1c, H2c, H3c)
Positive / negative organisational outcomes = Profit or loss (1,0)
Organisational 1.03 -0.13 -1.06 ***2.69 ***-2.79 1.48 ***-3.51
outcomes
Firm size *-1.95 ***4.13 -0.36 1.35 -1.40 0.39 1.39
Sector: Constant **2.04 ***5.48 ***3.63 ***9.24 ***7.28 ***35.14 ***13.43
Technology (+/-) -1.04 0.24 -0.01 *-0.73 0.68 -0.53 **2.36
Industrial (+/-) **-2.34 **2.23 0.92 -0.68 0.90 -0.06 ***3.87
Adj. R2 0.050 0.164 -0.002 0.138 0.139 -0.002 0.239
Positive / negative organisational outcomes = Earnings Increase or Decrease (1,0)
Organisational 0.11 0.97 -1.58 ***2.89 ***-2.99 0.86 -0.61
outcomes
Firm size *-1.67 ***4.26 -0.59 **2.16 **-2.24 0.91 0.10
Sector: Constant **2.13 ***5.02 ***3.83 ***8.65 ***7.49 ***33.84 ***11.78
Technology (+/-) -1.12 0.27 0.03 *-1.89 0.83 -0.63 **2.47
Industrial (+/-) **-2.50 **2.28 1.10 -1.09 1.34 -0.27 ***4.15
Adj. R2 0.039 0.173 0.014 0.148 0.149 -0.0186 0.136
Positive / negative organisational outcomes = Sales Increase or Decrease Relative to Sector Average (1,0)
Organisational **-1.98 1.30 0.65 0.68 ***-3.26 ***2.92 **-2.10
outcomes
Firm size -1.33 ***4.18 -0.94 **2.37 ***-2.12 0.55 0.39
Sector: Constant ***2.86 ***4.84 ***3.05 ***8.81 ***7.65 ***34.19 ***12.44
Technology (+/-) -1.30 0.35 0.12 *-1.82 0.65 -0.44 **2.36
Industrial (+/-) ***-2.64 2.34 1.10 -1.00 1.19 -0.15 ***4.15
Adj. R2 0.0793 0.180 -0.010 0.072 0.163 0.064 0.1739
Positive / negative organisational outcomes = Firm Growth (4 years) Relative to Sector Average (1,0)
Organisational **2.04 1.58 -0.61 0.13 ***-4.55 **2.04 ***-3.13
outcomes
Firm size 0.67 ***4.13 -0.71 **2.45 **-1.98 0.67 0.60
Sector: Constant ***33.96 ***4.84 ***3.49 ***9.04 ***8.38 ***33.96 ***13.15
Technology (+/-) -0.78 0.15 0.11 *-1.88 1.23 -0.78 ***2.79
Industrial (+/-) -0.19 2.37 1.05 -1.03 1.20 -0.19 ***4.23
Adj. R2 0.019 0.187 -0.010 0.067 0.241 0.019 0.219
Note: This table shows the regression results of (a) self-presentational dissimulation on financial performance (column 1)
and (b) the six linguistic indicators of self-presentational dissimulation on financial performance (columns 2-7).
Self-presentational dissimulation = – zWord Count – zSelf-reference – zReference to others + zPositive Emotion +
zNegative Emotion – zCognitive Complexity.
Z-scores for each indicator are calculated by subtracting the sample mean (µx) from each value (x) and then dividing by
the standard deviation (σx), i.e. zx = (x - µx)/ σx.
Positive / negative organisational outcomes is a 0-1 dummy variable, defined as indicated in italics above each set of
estimations. Firm size is the natural log of market value. The Consumer Cyclical sector is the reference category for the
sector effects.
*** Coefficient or test significant at the 1% level; ** Significant at the 5% level; * Significant at the 10% level.
23
24. 6. SUMMARY AND CONCLUSION
In this study we argue that the economic view of impression management is
reductionist in the sense that it treats managerial corporate annual reporting behaviour
as characterised exclusively by prospective rationality and driven by utility
maximisation. As corporate reporting takes place in a social context, accounting
research may benefit from the use of social psychology theories. We conceptualise
impression management as a social bias caused by managers anticipating an inquiry
by shareholders and stakeholders who evaluate their actions and decisions. This
causes managers to counteract undesirable consequences of information releases by
engaging in impression management. We employ a content analysis approach
pioneered by psychology research which focuses on the linguistic indicators of the
psychological processes underlying self-presentational dissimulation to analyse 93
UK chairmen’s statements of listed firms. Our results suggest that the accountability
function of corporate reporting does not prompt managers to provide a public account
of organisational outcomes which is inconsistent with how management may perceive
them (self-presentational dissimulation), but to provide explanations of their decisions
and actions as a way of making sense of them. This is in line with Aerts (2005) who
finds that the accountability function of corporate annual reporting causes managers
to engage in retrospective sense-making. Further, results suggest that impression
construction in corporate annual report documents entails presenting an accurate (i.e.,
consistent with an overall reading of the annual report), albeit favourable view of the
firm and financial performance.
6.1 Strengths and limitations of the paper
This paper introduces a social psychology perspective to corporate annual reporting
and impression management. We use psychology theories and apply a content
analysis approach developed by psychology research for measuring deception. The
content analysis method uses findings based on the behaviour of individuals
(Newman et al., 2003). The assumption that the behaviour of individuals and groups
of people, such as the firm’s management team, which tends to author corporate
narrative reports (Clarke and Murray, 2000), is the same is open to question. Like any
other quantitative content analysis approaches, the method used in this study
combines the advantages of automatic generation of content scores, namely ease of
application, objectivity, reliability, and speed, with psychological validity. However,
the downside of this approach is that words are analysed regardless of their context.
6.2 Implications of the research
The results suggest that corporate reporting is a more complex and multi-dimensional
process than acknowledged by the prior literature. Corporate narrative documents
may not only serve a vehicle for transmitting (biased) information and/or as a means
of forging relationships with shareholders and stakeholders, but also to provide an
account of organisational outcomes as a result of managerial actions and events. This
confirms Gibbins et al. (1990, p. 130) findings that different disclosure positions, i.e.,
“the shared meanings and understandings of the role of disclosure among managers
in a particular firm’ co-exist for different kinds of disclosures within the same firm.
Thus, 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
24
25. and events. These positions are based on different views regarding the ontological
nature of human behaviour and actions (Johnson et al., 2006) as either purposive or as
interpretive. If the ontological status of human behaviour is regarded as purposive,
then corporate reporting functions as “a technical device for coping with an objective
world, rationally fostering efficiency, order and stability” (Covaleski et al., 1985, p.
278). Alternatively, if the ontological status of human behaviour is regarded as
interpretive, then corporate reporting constitutes a symbolic activity during which
managers engage in social reality creation and “in so doing, … give meaning to their
ongoing stream of experience” (Boland and Pondy, 1983, p. 223).
The sense-making aspect in corporate communication may be further investigating by
comparing the way managerial actions, organisational outcomes, and events are
portrayed in more immediate communication vehicles, such as corporate press
releases, takeover documents, and prospectuses, and in corporate narrative documents
which serve an accountability function, such as corporate annual report documents.
6.3 Concluding comment
Accounting researchers tend to view corporate report documents primarily though the
lens of economics. This leads to a reductionist view of corporate reporting and
impression management as characterised by prospective rationality and driven by
utility maximisation. This paper provides a social psychology perspective which puts
the accountability context of corporate reporting at the centre of analysis. Conditions
of ex post accountability may result in impression motivation arising from the
managerial anticipation of the feedback effects of information and/or give rise to the
retrospective framing of organisational outcomes. Our findings suggest that
impression construction does not involve a disparity between managerial views of
organisational performance and the view portrayed publicly in corporate reports (self-
presentational dissimulation). Rather, impression construction entails presenting an
accurate (i.e., consistent with an overall reading of the annual report), albeit
favourable, view of the firm. Further, corporate annual report sections may not be
primarily used to shape outsiders’ perceptions of organisational outcomes, but rather,
to construct an account of organisational outcomes. In this respect, corporate
narratives, like conventional narratives, such as stories as myths, may serve to
“organise our experience and our memory of human happenings” (Bruner, 1991, p.
4).
25
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