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 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.
The document discusses the challenges that multinational corporations face in balancing standardization versus localization of practices. It presents evidence that MNCs manage three forces: standardization towards headquarters practices, standardization towards global best practices wherever they originate, and localization. The authors refer to balancing these three forces as the "Golden Triangle for MNCs." Survey results from American, Japanese, and German MNCs and their subsidiaries support that standardization towards global best practices, particularly American practices, is becoming more prevalent than strictly following headquarters or local practices. As perceptions of best practices evolve over time, MNCs must navigate standardizing, localizing, or combining approaches depending on the situation.
Merkl-Davies, Doris M., Brennan, Niamh M. and McLeay, Stuart J. [2011] Impres...Prof Niamh M. Brennan
Purpose – Prior accounting research views impression management predominantly though the lens of economics. Drawing on social psychology research, we provide a complementary perspective on corporate annual narrative reporting as characterised by conditions of ‘ex post accountability’ (Aerts, 2005, p. 497). These give rise to (i) impression management resulting from the managerial anticipation of the feedback effects of information and/or to (ii) managerial sense-making by means of the retrospective framing of organisational outcomes.
Design/methodology/approach – We use a content analysis approach pioneered by psychology research (Newman et al., 2003) which is based on the psychological dimension of word use to investigate the chairmen’s statements of 93 UK listed companies.
Findings – Results suggest that firms do not use chairmen’s statements to create an impression at variance with an overall reading of the annual report. We find that negative organisational outcomes prompt managers to engage in retrospective sense-making, rather than to present a public image of organisational performance inconsistent with the view internally held by management (self-presentational dissimulation). Further, managers of large firms use chairmen’s statements to portray an accurate (i.e., consistent with an overall reading of the annual report), albeit favourable, image of the firm and of organisational outcomes (i.e., impression management by means of enhancement).
Research limitations – The content analysis approach adopted in the study analyses words out of context.
Practical implications – Corporate annual reporting may not only be understood from a behavioural perspective involving managers responding to objectively determined stimuli inherent in the accountability framework, but also from a symbolic interaction perspective which involves managers retrospectively making sense of organisational outcomes and events.
Originality/value – Our approach allows us to investigate three complementary scenarios of managerial corporate annual reporting behaviour: (i) self-presentational dissimulation, (ii) impression management by means of enhancement, and (iii) retrospective sense-making.
This document discusses a study that examines human resource management (HRM) practices in subsidiaries of US, Japanese, and German multinational corporations (MNCs). The study aims to disentangle the effects of country of origin, localization, and dominance on HRM practices. It reviews debates on convergence vs divergence of management practices and standardization vs localization within MNCs. The study finds that for Japanese and German subsidiaries, HRM practices converge to dominant US practices rather than reflecting country of origin or localization effects, suggesting convergence in this function despite its local nature.
This document discusses integrating the theories of entrepreneurship and the economic theory of the firm. It argues that the concept of entrepreneurship as judgment, where judgment cannot be purchased on the market, means that entrepreneurs need firms to carry out their function. The document reviews how this notion of entrepreneurship as judgment can illuminate key themes in the modern economic theory of the firm, such as the existence of firms, boundaries of firms, and internal organization of firms. It introduces the distinction between productive and destructive entrepreneurship and how this can help understand firm organization.
The document summarizes research on agent risk taking and risk sharing between principals and agents from the perspectives of financial economics and behavioral science. It reviews the theoretical frameworks and empirical findings of both streams of research, which have largely operated independently. While financial economics focuses on risk sharing through incentive alignment, behavioral science examines incentive alignment directly. The document argues bridging these perspectives can further understanding of how risk sharing influences agent risk taking and returns for principals. It outlines key differences in assumptions between the rational self-interest perspective of financial economics and the behavioral perspective informed by prospect theory.
This document summarizes an article about human resource strategy as a management process. It proposes a framework to describe the different levels of analysis (societal, organizational, individual) that managers integrate to manage the meanings that organization members bring to their work. The process approach views HR strategy as emergent and negotiated, with the goal of managing meanings within the organization to influence HR policies, practices and philosophies over time.
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.
The document discusses the challenges that multinational corporations face in balancing standardization versus localization of practices. It presents evidence that MNCs manage three forces: standardization towards headquarters practices, standardization towards global best practices wherever they originate, and localization. The authors refer to balancing these three forces as the "Golden Triangle for MNCs." Survey results from American, Japanese, and German MNCs and their subsidiaries support that standardization towards global best practices, particularly American practices, is becoming more prevalent than strictly following headquarters or local practices. As perceptions of best practices evolve over time, MNCs must navigate standardizing, localizing, or combining approaches depending on the situation.
Merkl-Davies, Doris M., Brennan, Niamh M. and McLeay, Stuart J. [2011] Impres...Prof Niamh M. Brennan
Purpose – Prior accounting research views impression management predominantly though the lens of economics. Drawing on social psychology research, we provide a complementary perspective on corporate annual narrative reporting as characterised by conditions of ‘ex post accountability’ (Aerts, 2005, p. 497). These give rise to (i) impression management resulting from the managerial anticipation of the feedback effects of information and/or to (ii) managerial sense-making by means of the retrospective framing of organisational outcomes.
Design/methodology/approach – We use a content analysis approach pioneered by psychology research (Newman et al., 2003) which is based on the psychological dimension of word use to investigate the chairmen’s statements of 93 UK listed companies.
Findings – Results suggest that firms do not use chairmen’s statements to create an impression at variance with an overall reading of the annual report. We find that negative organisational outcomes prompt managers to engage in retrospective sense-making, rather than to present a public image of organisational performance inconsistent with the view internally held by management (self-presentational dissimulation). Further, managers of large firms use chairmen’s statements to portray an accurate (i.e., consistent with an overall reading of the annual report), albeit favourable, image of the firm and of organisational outcomes (i.e., impression management by means of enhancement).
Research limitations – The content analysis approach adopted in the study analyses words out of context.
Practical implications – Corporate annual reporting may not only be understood from a behavioural perspective involving managers responding to objectively determined stimuli inherent in the accountability framework, but also from a symbolic interaction perspective which involves managers retrospectively making sense of organisational outcomes and events.
Originality/value – Our approach allows us to investigate three complementary scenarios of managerial corporate annual reporting behaviour: (i) self-presentational dissimulation, (ii) impression management by means of enhancement, and (iii) retrospective sense-making.
This document discusses a study that examines human resource management (HRM) practices in subsidiaries of US, Japanese, and German multinational corporations (MNCs). The study aims to disentangle the effects of country of origin, localization, and dominance on HRM practices. It reviews debates on convergence vs divergence of management practices and standardization vs localization within MNCs. The study finds that for Japanese and German subsidiaries, HRM practices converge to dominant US practices rather than reflecting country of origin or localization effects, suggesting convergence in this function despite its local nature.
This document discusses integrating the theories of entrepreneurship and the economic theory of the firm. It argues that the concept of entrepreneurship as judgment, where judgment cannot be purchased on the market, means that entrepreneurs need firms to carry out their function. The document reviews how this notion of entrepreneurship as judgment can illuminate key themes in the modern economic theory of the firm, such as the existence of firms, boundaries of firms, and internal organization of firms. It introduces the distinction between productive and destructive entrepreneurship and how this can help understand firm organization.
The document summarizes research on agent risk taking and risk sharing between principals and agents from the perspectives of financial economics and behavioral science. It reviews the theoretical frameworks and empirical findings of both streams of research, which have largely operated independently. While financial economics focuses on risk sharing through incentive alignment, behavioral science examines incentive alignment directly. The document argues bridging these perspectives can further understanding of how risk sharing influences agent risk taking and returns for principals. It outlines key differences in assumptions between the rational self-interest perspective of financial economics and the behavioral perspective informed by prospect theory.
This document summarizes an article about human resource strategy as a management process. It proposes a framework to describe the different levels of analysis (societal, organizational, individual) that managers integrate to manage the meanings that organization members bring to their work. The process approach views HR strategy as emergent and negotiated, with the goal of managing meanings within the organization to influence HR policies, practices and philosophies over time.
This document summarizes several studies on capital structure and the determinants of a firm's capital structure. It discusses five empirical studies conducted between 1982-2004 that analyzed factors like firm size, growth opportunities, profitability, and country-level institutional differences that influence whether firms use more debt or equity in their capital structure. The studies found support for theories like the pecking order theory and trade-off theory in determining capital structure. Overall, the document reviews literature on capital structure theories and empirical evidence on how various firm characteristics and country-level factors impact capital structure decisions.
This document summarizes several studies on capital structure that were conducted between 1982 and 2009. The studies examined factors that influence a firm's capital structure decisions, such as profitability, growth opportunities, firm size, asset composition, and country-specific institutional factors. The studies generally found support for theories like the pecking order theory and trade-off theory in explaining capital structure choices. For example, more profitable firms tended to rely more on internal financing rather than debt, while firm size and asset composition influenced target debt levels. However, the studies also found that capital structure decisions are impacted by firm-specific and country-level institutional differences.
Managing the Disappointment of Job Terminationut san antonio
This article examines how the outplacement consulting industry uses strategies similar to "cooling out the mark" to manage the disappointment of terminated employees. The industry portrays outplacement as helping employees with their job search and emotional transition, but actually aims to minimize problematic reactions from terminated workers that could harm employers. The article analyzes literature from outplacement practitioners describing how outplacement functions as a self-protective device for employers by orchestrating emotions, goals, and energies of terminated employees to accept their job loss in a way that poses minimal risk.
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.
Human Energy and Immaterial Communication: The missing link for Inspirational...CSCJournals
Why does Harvard Business Review consider the article ‘Pygmalion in Management’ from the 1970s as one of the best in the area of Motivation, and yet there has been negligible research about this topic in the field of leadership? Probably because the Pygmalion Effect can only be studied using complexity sciences. This paper covers the scientific discoveries in the field of human energy in the last century, and connects them to an interdisciplinary analysis of quantum mechanics, bio-fields, neuroplasticity, and epigenetics, in order to give novel explanations of how the Pygmalion Effect happens and how it is essential to understand leadership and vanguard management. Hence, a new leadership soft-skill is constructed: immaterial communication. This new leadership construct is helping reduce the 86% rate (Gallup, 2013) of disengaged workers around the world. A descriptive proposal of operationalizing Immaterial Communication is presented at the end.
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.
This document is a literature review on the driving forces behind enterprise risk management (ERM) and the value it provides organizations. The review examines how firm size, complexity, industries and other factors influence adoption of ERM. Larger, more diversified and complex firms tend to implement ERM more due to greater needs and resources. While ERM provides benefits, some studies note its challenges for internationally diversified companies. Overall the review aims to understand what drives ERM adoption and identify the value it creates within different organizational structures.
This document provides biographical background on management scholar Sumantra Ghoshal. It details his educational and professional background, including obtaining doctorates from MIT and Harvard. It outlines his key theories on management, including rejecting rigid hierarchical structures and control-based systems in favor of flexibility, creativity, and developing employee skills. Ghoshal argued organizations should focus on creating value rather than just extracting efficiency. He emphasized trust-based cultures, shared purpose, and a "new moral contract" focused on employability rather than job security.
Distress risk and stock returns in an emerging marketAlexander Decker
This research study examines the relationship between financial distress and stock returns of listed companies in Pakistan. The study uses Altman's Z-score model to measure distress risk and subsequent realized stock returns as a proxy for market performance. The sample includes 17 distressed and 17 non-distressed firms listed on the Karachi Stock Exchange between 2006-2011. The results found a positive but insignificant relationship between distress risk and stock returns for distressed firms, suggesting distress risk may be a systematic risk for the Pakistani stock market to some extent. For non-distressed firms, distress risk was negatively correlated with stock returns and this relationship was statistically significant. The study is inconclusive on whether distress risk explains stock returns in Pakistan.
Flagship Consulting, a specialist professional services communications company, has published its ‘Social Media in Accountancy’ report. We have analysed the top 60 accountancy firms, according to fee income by Accountancy Age, and conducted a review of their social media activity. Our report positions these top 60 firms according to their social media prowess.
This document reports on a project that aimed to help law students develop narrative skills by having them write fictional stories based on case facts. Students participated in storytelling seminars led by a poet and were assigned to write short stories based on real cases. The goals were to help students see cases from the human perspective and appreciate the role of narratives. Student feedback indicated they enjoyed looking at cases differently and seeing the human stories behind them. The project leaders believe developing narrative skills can make students better lawyers by helping them understand different perspectives.
This document outlines the required sections and contents for a narrative report on an on-the-job training practicum, including: an introduction with company background information, weekly progress reports and documentation of work, an assessment of the practicum experience addressing what was learned, experiences with coworkers, memorable events, recommendations, and advice for future students. It also lists the required appendices such as application materials, schedules, evaluations, and specifies an oral presentation covering the company profile, accomplishments, documentation, and assessment of the practicum program.
This document provides rubrics for assessing student writing, listening and speaking in high school. It includes 14 writing rubrics that cover various types of writing assignments like responses to literature, narratives, essays, reports and speeches. It also includes 14 rubrics for assessing oral presentations and interpretations in areas like responding to literature, delivering narratives, analyses and reports. The rubrics provide detailed criteria for evaluating student work in terms of ideas, organization, voice, word choice, sentence structure, conventions and delivery skills.
This narrative report summarizes the in-campus and off-campus on-the-job training experiences of Angelito T. Pera, a graduating student of Bachelor of Science in Industrial Technology major in Computer Technology at Surigao del Sur State University, Cagwait Campus. It details his various tasks and responsibilities during his training at the BSIT Program Chair's Office on campus and at the Office of the Municipal Vice Mayor in Cagwait, Surigao del Sur. These experiences helped him gain new knowledge and skills in areas like computer operations, following office protocols, and understanding workplace dynamics, helping to fulfill the objectives of his OJT requirement for graduation.
Telecommunication in the modern era is the science and practice of transmitting and receiving information by electromagnetic means and through fibre. The long term evolution of new technologies and services has continued, focusing attention on the growing importance of telecommunications for national economies and the growth of international trade in telecommunications services. In turn this has fuelled the transition in recent decades from monopoly structures to competitive ones with two companies to operate in Bhutan since few years back.
Van Loven S. Semborio completed a 400-hour internship with the Marketing Department of Pag-ibig Fund in Iligan City from July to September 2013. On the first day, he felt nervous meeting his manager and department head but focused on learning his tasks. Over time, he improved and proved he could handle various responsibilities. He worked at the front desk assisting clients by registering them online, asking questions, and filing paperwork. While most clients were pleasant, some were difficult to deal with, like one who shouted at him when he misunderstood instructions. Overall, he enjoyed the experience and is grateful for the opportunity to develop skills relevant to his Information Technology studies in a real work environment.
This summary provides an overview of Jomel R. Bulilis' narrative report on his on-the-job training experience at Abacus Distribution System Philippines Inc. in Cebu City. In 3 sentences:
Bulilis conducted his on-the-job training as a trainee in the Technical Support department, where he learned skills related to his computer science degree as well as gaining experience working in a professional environment. The training helped him develop both technical and soft skills, and reinforced the importance of what he learned academically. Bulilis found the experience very valuable for his future career goals of becoming a Technical Support Manager.
1) The document is a narrative report from a student named Lady Lee describing her 150-hour internship with the Technical Operations Division/Film Archives department of ABS-CBN.
2) During her internship, Lady Lee gained experience with tasks like answering phones, transcribing and rewinding tapes, retrieving and arranging films/tapes in the film vault, and encoding filmographic details.
3) By the end of the internship, Lady Lee learned valuable lessons about archiving principles, accountability, time management, and developing her personality and capabilities.
Introduction for Narrative Report at Guidance and Counseling ServicesCathy Roque
The document provides information about an internship program at the Eulogio “Amang” Rodriguez Institute of Science and Technology. It includes an introduction to the internship program and its importance. It then details the course syllabus for the Practicum/Internship subject, including objectives, requirements and evaluation methods. Finally, it describes the trainee's experiences working in the Counseling and Testing Services department, including administering exams, checking answers, assisting clients and the insights gained from the internship.
This document provides guidance on writing narrative paragraphs. It defines a narrative paragraph as one that tells a story or event in chronological order. It discusses including central ideas, characters, plots, descriptions, and settings. The document recommends organizing paragraphs with a background, summary of the story/event, and conclusion. It provides examples of narrative paragraphs and activities for the reader to practice writing their own.
A graduating student is applying for an on-the-job training position at the company for 300 hours to fulfill requirements of their two-year course. They believe the experience will enhance their skills and knowledge in information technology. They provide their contact information and hope for a favorable response to gain valuable experience in the field.
This document summarizes several studies on capital structure and the determinants of a firm's capital structure. It discusses five empirical studies conducted between 1982-2004 that analyzed factors like firm size, growth opportunities, profitability, and country-level institutional differences that influence whether firms use more debt or equity in their capital structure. The studies found support for theories like the pecking order theory and trade-off theory in determining capital structure. Overall, the document reviews literature on capital structure theories and empirical evidence on how various firm characteristics and country-level factors impact capital structure decisions.
This document summarizes several studies on capital structure that were conducted between 1982 and 2009. The studies examined factors that influence a firm's capital structure decisions, such as profitability, growth opportunities, firm size, asset composition, and country-specific institutional factors. The studies generally found support for theories like the pecking order theory and trade-off theory in explaining capital structure choices. For example, more profitable firms tended to rely more on internal financing rather than debt, while firm size and asset composition influenced target debt levels. However, the studies also found that capital structure decisions are impacted by firm-specific and country-level institutional differences.
Managing the Disappointment of Job Terminationut san antonio
This article examines how the outplacement consulting industry uses strategies similar to "cooling out the mark" to manage the disappointment of terminated employees. The industry portrays outplacement as helping employees with their job search and emotional transition, but actually aims to minimize problematic reactions from terminated workers that could harm employers. The article analyzes literature from outplacement practitioners describing how outplacement functions as a self-protective device for employers by orchestrating emotions, goals, and energies of terminated employees to accept their job loss in a way that poses minimal risk.
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.
Human Energy and Immaterial Communication: The missing link for Inspirational...CSCJournals
Why does Harvard Business Review consider the article ‘Pygmalion in Management’ from the 1970s as one of the best in the area of Motivation, and yet there has been negligible research about this topic in the field of leadership? Probably because the Pygmalion Effect can only be studied using complexity sciences. This paper covers the scientific discoveries in the field of human energy in the last century, and connects them to an interdisciplinary analysis of quantum mechanics, bio-fields, neuroplasticity, and epigenetics, in order to give novel explanations of how the Pygmalion Effect happens and how it is essential to understand leadership and vanguard management. Hence, a new leadership soft-skill is constructed: immaterial communication. This new leadership construct is helping reduce the 86% rate (Gallup, 2013) of disengaged workers around the world. A descriptive proposal of operationalizing Immaterial Communication is presented at the end.
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.
This document is a literature review on the driving forces behind enterprise risk management (ERM) and the value it provides organizations. The review examines how firm size, complexity, industries and other factors influence adoption of ERM. Larger, more diversified and complex firms tend to implement ERM more due to greater needs and resources. While ERM provides benefits, some studies note its challenges for internationally diversified companies. Overall the review aims to understand what drives ERM adoption and identify the value it creates within different organizational structures.
This document provides biographical background on management scholar Sumantra Ghoshal. It details his educational and professional background, including obtaining doctorates from MIT and Harvard. It outlines his key theories on management, including rejecting rigid hierarchical structures and control-based systems in favor of flexibility, creativity, and developing employee skills. Ghoshal argued organizations should focus on creating value rather than just extracting efficiency. He emphasized trust-based cultures, shared purpose, and a "new moral contract" focused on employability rather than job security.
Distress risk and stock returns in an emerging marketAlexander Decker
This research study examines the relationship between financial distress and stock returns of listed companies in Pakistan. The study uses Altman's Z-score model to measure distress risk and subsequent realized stock returns as a proxy for market performance. The sample includes 17 distressed and 17 non-distressed firms listed on the Karachi Stock Exchange between 2006-2011. The results found a positive but insignificant relationship between distress risk and stock returns for distressed firms, suggesting distress risk may be a systematic risk for the Pakistani stock market to some extent. For non-distressed firms, distress risk was negatively correlated with stock returns and this relationship was statistically significant. The study is inconclusive on whether distress risk explains stock returns in Pakistan.
Flagship Consulting, a specialist professional services communications company, has published its ‘Social Media in Accountancy’ report. We have analysed the top 60 accountancy firms, according to fee income by Accountancy Age, and conducted a review of their social media activity. Our report positions these top 60 firms according to their social media prowess.
This document reports on a project that aimed to help law students develop narrative skills by having them write fictional stories based on case facts. Students participated in storytelling seminars led by a poet and were assigned to write short stories based on real cases. The goals were to help students see cases from the human perspective and appreciate the role of narratives. Student feedback indicated they enjoyed looking at cases differently and seeing the human stories behind them. The project leaders believe developing narrative skills can make students better lawyers by helping them understand different perspectives.
This document outlines the required sections and contents for a narrative report on an on-the-job training practicum, including: an introduction with company background information, weekly progress reports and documentation of work, an assessment of the practicum experience addressing what was learned, experiences with coworkers, memorable events, recommendations, and advice for future students. It also lists the required appendices such as application materials, schedules, evaluations, and specifies an oral presentation covering the company profile, accomplishments, documentation, and assessment of the practicum program.
This document provides rubrics for assessing student writing, listening and speaking in high school. It includes 14 writing rubrics that cover various types of writing assignments like responses to literature, narratives, essays, reports and speeches. It also includes 14 rubrics for assessing oral presentations and interpretations in areas like responding to literature, delivering narratives, analyses and reports. The rubrics provide detailed criteria for evaluating student work in terms of ideas, organization, voice, word choice, sentence structure, conventions and delivery skills.
This narrative report summarizes the in-campus and off-campus on-the-job training experiences of Angelito T. Pera, a graduating student of Bachelor of Science in Industrial Technology major in Computer Technology at Surigao del Sur State University, Cagwait Campus. It details his various tasks and responsibilities during his training at the BSIT Program Chair's Office on campus and at the Office of the Municipal Vice Mayor in Cagwait, Surigao del Sur. These experiences helped him gain new knowledge and skills in areas like computer operations, following office protocols, and understanding workplace dynamics, helping to fulfill the objectives of his OJT requirement for graduation.
Telecommunication in the modern era is the science and practice of transmitting and receiving information by electromagnetic means and through fibre. The long term evolution of new technologies and services has continued, focusing attention on the growing importance of telecommunications for national economies and the growth of international trade in telecommunications services. In turn this has fuelled the transition in recent decades from monopoly structures to competitive ones with two companies to operate in Bhutan since few years back.
Van Loven S. Semborio completed a 400-hour internship with the Marketing Department of Pag-ibig Fund in Iligan City from July to September 2013. On the first day, he felt nervous meeting his manager and department head but focused on learning his tasks. Over time, he improved and proved he could handle various responsibilities. He worked at the front desk assisting clients by registering them online, asking questions, and filing paperwork. While most clients were pleasant, some were difficult to deal with, like one who shouted at him when he misunderstood instructions. Overall, he enjoyed the experience and is grateful for the opportunity to develop skills relevant to his Information Technology studies in a real work environment.
This summary provides an overview of Jomel R. Bulilis' narrative report on his on-the-job training experience at Abacus Distribution System Philippines Inc. in Cebu City. In 3 sentences:
Bulilis conducted his on-the-job training as a trainee in the Technical Support department, where he learned skills related to his computer science degree as well as gaining experience working in a professional environment. The training helped him develop both technical and soft skills, and reinforced the importance of what he learned academically. Bulilis found the experience very valuable for his future career goals of becoming a Technical Support Manager.
1) The document is a narrative report from a student named Lady Lee describing her 150-hour internship with the Technical Operations Division/Film Archives department of ABS-CBN.
2) During her internship, Lady Lee gained experience with tasks like answering phones, transcribing and rewinding tapes, retrieving and arranging films/tapes in the film vault, and encoding filmographic details.
3) By the end of the internship, Lady Lee learned valuable lessons about archiving principles, accountability, time management, and developing her personality and capabilities.
Introduction for Narrative Report at Guidance and Counseling ServicesCathy Roque
The document provides information about an internship program at the Eulogio “Amang” Rodriguez Institute of Science and Technology. It includes an introduction to the internship program and its importance. It then details the course syllabus for the Practicum/Internship subject, including objectives, requirements and evaluation methods. Finally, it describes the trainee's experiences working in the Counseling and Testing Services department, including administering exams, checking answers, assisting clients and the insights gained from the internship.
This document provides guidance on writing narrative paragraphs. It defines a narrative paragraph as one that tells a story or event in chronological order. It discusses including central ideas, characters, plots, descriptions, and settings. The document recommends organizing paragraphs with a background, summary of the story/event, and conclusion. It provides examples of narrative paragraphs and activities for the reader to practice writing their own.
A graduating student is applying for an on-the-job training position at the company for 300 hours to fulfill requirements of their two-year course. They believe the experience will enhance their skills and knowledge in information technology. They provide their contact information and hope for a favorable response to gain valuable experience in the field.
The document provides an overview of on-the-job training (OJT). It defines OJT as job training that occurs in the workplace while the new employee learns and earns a paycheck. OJT has advantages like being cost-effective, but can be challenging to implement if not properly planned. The document also discusses the history, vision, mission and organizational structure of Mabitac, a municipality in Laguna, Philippines that supports OJT programs to develop its employees.
The document is a final practicum report submitted by Arvin Dominic B. Dela Cruz to fulfill the requirements for his Bachelor of Science in Computer Engineering degree. It details his 240-hour on-the-job training period from April 28 to June 6, 2014 at Prime IT Source, Inc. in Quezon City, Philippines, where he gained hands-on experience in the field of information technology. The report includes sections on the company profile, his daily activities and responsibilities, and a performance evaluation.
The document summarizes a seminar attended by Jane G. Macasa, a 4th year BS Computer Science student. The seminar topic was server virtualization, presented by Mr. Jeff Dela Pena. Jane learned that virtualization allows multiple virtual computing environments to run on a single physical server, reducing hardware costs and increasing resource utilization. There are two types of virtualization: host-based uses an operating system layer below the virtual machines, while bare-metal has no operating system layer. Jane observed the speaker was knowledgeable and students were engaged through discussion and freebies. She suggested providing handouts so students could focus on listening rather than copying notes.
On the-job-trainee (NARRATiVE REPORT) Sheenbie PaladoSheenbie Palado
This document is a narrative report submitted by Sheenbie Miana Palado detailing their 11-week industry practicum at Uomini Language Institute Inc. Over the course of the practicum, Palado held the role of admin secretary and performed various administrative tasks like encoding student profiles, organizing files, assisting clients, and assisting with German language classes. The report provides a weekly breakdown of Palado's duties and experiences during the practicum placement.
This document provides standards and competencies for reading and writing skills in Indonesian. It includes standards for understanding short functional texts and analytical essays in everyday contexts. Key competencies involve responding to meaning and rhetorical steps in essays using accurate written language.
The document then discusses a narrative text structure, which includes orientation, complication, and resolution. It provides examples of language features in narratives, including past tenses and noun phrases. Vocabulary lists words related to animals, nature, and locations.
An example narrative text is provided about a cat, frog and camel comparing when they were born. Comprehension questions follow about the story's genre, characters' actions and reasons. The conclusion restates that narrative texts have an orientation
This document is a narrative report submitted by Angeline Fate E. Capa in partial fulfillment of the requirements for a Bachelor of Science in Accountancy from Colegio de San Gabriel Arcangel. It details her on-the-job training experience at the Commission on Audit located in Quezon City, Philippines. The report includes an introduction on the purpose of on-the-job training, a company profile of the Commission on Audit, a narrative of her weekly activities and learnings, and appendices with supporting documents.
Ppt. developing a conceptual frameworkNursing Path
The document discusses the process of developing a conceptual framework. It explains that a conceptual framework identifies key concepts and relationships between concepts that are relevant to understanding a research problem. The purposes of a conceptual framework include keeping research focused, linking literature to research goals, clarifying concepts and relationships, and providing a structure for research design and analysis. A conceptual framework is developed by identifying concepts, defining them, determining relationships between concepts through propositions, and operationalizing abstract concepts.
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.
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.
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.
This document discusses three models of managerial analysis:
1) The structure-conduct-performance paradigm focuses on harmonizing planning and control within individual organizations.
2) The systemic approach views businesses as open systems within larger environments and emphasizes transversal risk management.
3) Value-based management aims to maximize shareholder value through decision-making, resource allocation, and performance assessment.
Governance is responsible for development, coordination, economic objectives, and social legitimacy. In complex global environments, risk management models become more sophisticated.
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.
Managerial Competencies, Corporate Values and Integrity- A Meta-Analysis of L...Alexander Gray
This document provides a summary and analysis of literature on managerial competencies, corporate values, and integrity. It discusses differing definitions of management, including Mintzberg's view that management involves balancing art, science, and craft through experience over time. The document also examines the relationship between managers and leaders, with Mintzberg arguing the distinction is conceptual only. Finally, it analyzes the potential changes modern capitalism and social entrepreneurship may bring, including adopting a "shared value" approach where companies make longer-term decisions that benefit both business and society.
Best perspectives to human resource management by Arrey Mbongaya Ivoivo arrey
Publication
Best perspectives to human resource management
Author: Ivo Arrey Mbongaya
African Centre for Community and Development
P.O. Box 181 Limbe Cameroon
Content
1.0 Introduction, Perspectives in Management and the genesis of Human Resource Management
1.1 Scientific or Closed management, Human Relations or Semi open system, Open System or Contingency system
1.2 Personnel management/ Personnel Manager
1.3 The genesis of Human Resource Management(HRM)/Defining Human Resource Management
1.4 What is ‘Hard’ and ‘Soft’ HRM?
1.5 The Debate between Human Relations(HR) and Human Resource Management(HRM)
1.6 The Human Resource Manager and his role
2.0 Attempting a framework for Human Resource Management(HRM)
2.1 Using HRM as a style, a strategy and an outcome
2.2 Is HRM a restatement of Personnel Management?
2.3 Is HRM a new managerial discipline?
2.4 HRM as a resource-based dimension of management
2.5 The Strategic and international possibilities of HRM
3.0Using some models of HRM to critically assess HRM “Hard” and “Soft” Approaches.
3.1The Harvard Model
3.2The Michigan Model
3.3Guest comparative models
3.4The ‘Choice Model’ and its benefits.
4.0The influence of senior management and their Effectiveness
4.1 policy makers
4.2 senior managers and their frames of reference
4.3 The more effective the better the policies
4.4 The Japanese example
5.0 Conclusion, limitations and proposals
5.1HRM a widespread contemporary, evolving & contingent tool
5.2The ‘softness’ of HRM, “bundles” and performance
5.3 Holistic thinking, right and egalitarian based HRM
This document provides a summary of a bachelor thesis examining how behavioral biases like overconfidence and optimism may influence corporate financial decision-making, specifically dividend policy. It first discusses definitions of biases from psychology and whether managers should be assumed rational. It then examines measures of overconfidence, focusing on approaches by Malmendier and Tate and Ben-David, and measures of optimism, focusing on Campbell and Otto. Finally, it analyzes how overconfidence and optimism may influence dividend policy decisions. The goal is to link behavioral biases to corporate decisions through empirical studies of top managers' decision-making processes.
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.
This document provides an overview of perspectives in human resource management and the evolution of the field. It discusses three main management perspectives: 1) the scientific or closed system focused on control and efficiency; 2) the human relations or semi-open system incorporated some welfare practices but still emphasized top-down control; and 3) the open system views the organization as organic and emphasizes developing human resources as key to performance. The document then discusses personnel management and its replacement by the contemporary field of human resource management, which is oriented toward business strategy and competitive advantage. It proposes using models to analyze the impact of different "hard" and "soft" HRM approaches on organizational outcomes.
This document provides an overview of corporate governance in banks and its impact on risk and performance based on a review of the literature. It discusses three main areas:
1. Ownership structure - Specifically examines different types of bank owners and how their incentives and goals impact risk taking.
2. Board structure - Focuses on boards of directors and their framework which is dependent on the legal, regulatory and ethical environment.
3. Risk management - Looks at governance mechanisms aimed at preventing excessive risk taking in banks.
The document reviews theories around agency problems and stakeholder interests in corporate governance. It also discusses how the institutional context is important for understanding governance approaches across different societies.
Strategic management provides an overview of its various schools of thought focused on strategy formation. These include design, planning, positioning, entrepreneurial, cognitive, learning, political, cultural, environmental, and configurational schools. Strategic management's dominant paradigm views strategy as consisting of scope, resources, advantage, and synergy. It proposes strategic management could help resolve disagreements in entrepreneurship through its focus on the "entrepreneurial work of the organization."
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
The document summarizes Donald C. Hambrick's Upper Echelon Theory. The theory proposes that executives make decisions and act based on their own personal experiences and interpretations of situations rather than objectively. It also argues that the collective characteristics of a company's top management team are more predictive of organizational outcomes than any individual executive. The theory was refined over time to include the concepts of managerial discretion and behavioral integration of the top management team. Empirical evidence from several studies provided support for aspects of the theory. Challenges remain in fully understanding the cognitive mechanisms by which executive characteristics influence decisions.
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.
This document is a bachelor thesis that investigates the impact of capital structure choice on investment decisions of firms. Specifically, it examines the effect of leverage on investment decisions for all Dutch AEX-listed firms as well as separately for high-growth and low-growth firms. The thesis begins with an introduction and literature review on the relationship between leverage and investment. It then describes the regression model that will be used for analysis and defines the variables. Finally, it presents the results of the regression analysis and draws conclusions regarding the effect of leverage on investment decisions.
This document discusses strategic planning and positive versus normative aspects of strategy. It provides examples of positive strategies that have been employed, such as increasing market share by hiring employees with disabilities to better understand and serve customer needs. The document also discusses business models and examples like component business models and e-business models. Finally, it cautions against a "cookie cutter" approach to strategy and argues that strategies must be tailored to each organization's specific situation.
Module 5 Module 5 OverviewProvides the learning outcomes on wh.docxgilpinleeanna
This document provides an overview of Module 5 which examines issues related to human resource management in the context of the global business environment. It discusses evaluating trends in global HR, managing international employees, training international staff, the roles of HR leadership, and transforming HR through technology such as web-based applications. The module investigates how effective HR improves multicultural communication and organizational performance in multinational corporations.
This document provides an introduction to managerial economics. It defines economics as the study of human economic activity and wealth. It discusses microeconomics as the study of individual consumers and firms, and macroeconomics as the study of aggregate economic activity in a country. Managerial economics bridges traditional economics theory and real business practices by providing tools to help managers make competent decisions. It operates within the constraints of macroeconomic conditions and suggests prescriptive actions to optimally solve problems given a firm's objectives. The scope of managerial economics includes decisions around product selection, production methods, pricing, promotion, and location from an operational and environmental perspective.
Similar to Merkl-Davies and Brennan A Conceptual Framework of Impression Management: New Insights (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.
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. 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 and Gray, Sidney J. [2005] The Impact of Materiality: Accounti...Prof Niamh M. Brennan
This paper comprises a review of the literature on materiality in accounting. The paper starts by examining the context in which materiality is relevant, and the problems arising from applying the concept in practice. Definitions of materiality from legal, accounting and stock exchange sources are compared. The relevance of materiality to various accounting situations is discussed. Methods of calculating quantitative thresholds are described and illustrated. Prior research is reviewed, focussing on materiality thresholds, and on the materiality judgments of auditors, preparers and financial statement users. The paper concludes with some suggestions for future research and for policy makers concerning this best kept accounting secret.
Brennan, Niamh [2005] Accounting Expertise in Litigation and Dispute Resoluti...Prof Niamh M. Brennan
This document summarizes the role of expert witnesses in litigation, with a focus on accounting experts. It discusses how expert witnesses are used to assist courts in resolving complex issues outside the knowledge of judges and juries. The expert's primary duty is to the court, not to the hiring party. The summary also outlines important qualities of expert testimony like being unbiased, relevant, reliable, and cost-effective. It notes that experts can face civil liability for negligence if these qualities are lacking. Finally, it provides an overview of the process for selecting and engaging expert witnesses.
Brennan, Niamh and McDermott, Michael [2004] Alternative Perspectives on Inde...Prof Niamh M. Brennan
This paper examines the issue of independence of boards of directors and non-executive direc¬tors of companies listed on the Irish Stock Exchange. Based on information published in annual reports, the study found that most Irish listed companies were complying with the Combined Code’s recommendations for a balanced board structure, albeit with only 60 per cent having majority-independent boards. The study found a lack of consistency in inter-preting the definition of “independence”, a lack of disclosure of information and, by apply¬ing criteria generally regarded as prerequisite to independence of non-executive directors, certain situations which imposed upon their independence.
Brennan, Niamh [2003] Accounting in crisis: A story of auditing, accounting, ...Prof Niamh M. Brennan
Recent accounting scandals are the product of multiple failings of auditing, accounting, corporate governance and of the market. In discussing the many factors that led to failure, this paper attempts to provide insights on regulatory inadequacies that contributed to these problems. At the centre is human failure – in particular greed and weakness. Reforms in progress are briefly examined, with the caveat that no reforms will ever fully cater for human weakness.
Brennan, Niamh [2001] Reporting Intellectual Capital in Annual Reports: Evide...Prof Niamh M. Brennan
This paper examines the extent to which a sample of 11 knowledge-based Irish listed companies is adopting methodologies for reporting of intellectual capital in their annual reports. Their market and book values were compared and a content analysis of the annual reports of the 11 listed companies was conducted. With the exception of two of the 11 listed companies, significant differences in market and book values were found suggesting that knowledge-based Irish listed companies have a substantial level of non-physical, intangible, intellectual capital assets. The level of disclosure of intellectual capital attributes by the 11 listed companies studied was low.
Brennan, Niamh and Connell, Brenda [2000] Intellectual Capital: Current Issue...Prof Niamh M. Brennan
Substantial differences between company book values and market values indicate the presence of assets not recognised and measured in company balance sheets. Intellectual capital assets account for a substantial proportion of this discrepancy. At present, companies are not required to report on intellectual capital assets which leaves the traditional accounting system ineffective for measuring the true impact of such intangibles.
Regulations currently in place are analysed in this paper. Prior research concerning intellectual capital is next presented. Frameworks for intellectual capital are compared. Indicators used for the measurement of intellectual capital are examined. The research methodologies employed for collecting information about the use of intellectual capital accounts in companies are reviewed.
Guidelines available to companies for reporting on intellectual capital are considered and also the efforts made towards developing an accounting standard for intellectual capital. Finally, current issues and policy implications of accounting for intellectual capital in the future are examined.
Brennan, Niamh and Hourigan, Denis [2000] Corporate Reporting on the Internet...Prof Niamh M. Brennan
This document summarizes a study examining corporate reporting practices on the Internet by Irish companies in 1998. The study analyzed 109 Irish listed and semi-state companies. It found that 35 (37%) listed companies and 15 (100%) semi-state companies had a website. Larger companies and those in the services and financial industries were more likely to have a website. The study aimed to examine the level of Internet usage, types of financial information disclosed, and characteristics of companies with websites, such as size, leverage, and industry.
Brennan, Niamh [2000] An Empirical Examination of Forecast Disclosure by Bidd...Prof Niamh M. Brennan
This paper examines voluntary disclosure of profit forecasts by bidding companies during takeovers. Disclosure is examined from two perspectives: (i) factors influencing disclosure and (ii) the influence of good news and bad news on disclosure.
Takeover documents published during 701 takeover bids for public companies listed on the London Stock Exchange in the period 1988 to 1992 were examined.
Two variables accounted for almost all the influences on disclosure of forecasts: bid horizon and type of bid. Probability of forecast disclosure was greater the shorter the bid horizon and during contested bids. In addition, there was some evidence that the nature of the purchase consideration offered by the bidder (cash or paper) and the industry of the bidder influenced disclosure. Disclosure was significantly more likely in paper bids and in the durable goods industry.
Forecasts were more likely to be disclosed when firms had good news to report.
Brennan, Niamh and Marston, Claire [1999] A Comparative Analysis of Required ...Prof Niamh M. Brennan
This paper explores the extent to which there are significant differences in disclosure requirements under US, UK, international accounting standards. Previous research into international disclosure diversity has focused on an analysis of disclosure practices in different countries rather than on disclosures required by regulations in different countries.
Financial disclosures required by UK professional regulations and by International Accounting Standards (IASs) are summarised and classified using Barth and Murphy’s (1994) categorisation by purpose of disclosure and by category and subject. US, UK and international required disclosures are compared and areas of divergence are highlighted.
Although differences in required disclosures between the three regulatory regimes are evident from the analysis, these differences are not significant in the multivariate models tested. A notable difference is greater required disclosures in the UK/IASs concerning entity structures (business combinations, consolidations, segmental reporting etc.).A greater proportion of US required disclosures address risks and potentials and assess returns. A much greater proportion of UK/IASs disclosures related to items recognised in accounts.
The Financial Accounting Standards Board is currently examining the issue of disclosure effectiveness in the US. By highlighting areas of diversity in required disclosures in the US, UK and internationally this study will add insights to this discussion of disclosure effectiveness.
Brennan, Niamh [1999] Voluntary Disclosure of Profit Forecasts by Target Comp...Prof Niamh M. Brennan
This paper examines factors influencing voluntary forecast disclosure by target companies, whether good/bad news forecasts are disclosed and the influence of forecasts on the outcome of hostile bids. Disclosure was significantly more likely during contested bids. In agreed bids, probability of forecast disclosure was greater the shorter the bid horizon. In contested bids, forecasts were more likely where there were large block shareholdings, for larger targets and for targets in the capital goods industry. There was a clear tendency to disclose good news forecasts. A significant positive association between forecast disclosure and increase in offer price was found.
MacCanna, Leo, Brennan, Niamh and O’Higgins, Eleanor [1999] National Networks...Prof Niamh M. Brennan
This paper maps the network of interlocking directorships formed by the boards of the top 50 financial and 200 non-financial companies in Ireland. The Irish network is compared with those in ten countries, based on the same sample size and selection criteria as used in this paper, using the methods and theory of Social Network Analysis (SNA). Fundamental to the paper is the idea that the network of interlocking directorates is in some way structured, and not the result of random processes.
Irish boards were found to have a relatively loose connected network structure which is sparser and less dense than those of other countries. This is reflected in the relatively low percentage of multiple directors and the relatively fewer number of directorships per multiple director.
In general, indigenous Irish public companies tended to be central in the network, while a disproportionately large number of foreign and private companies were isolated on the periphery. However, a number of foreign-owned companies were central to the network - in particular, those which started as indigenous Irish companies which were subsequently taken over.
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Merkl-Davies and Brennan A Conceptual Framework of Impression Management: New Insights
1. A Conceptual Framework of Impression Management:
New insights from psychology, sociology, and critical perspectives
Doris M. Merkl-Davies
Bangor Business School, Bangor University, UK
Niamh M. Brennan
Quinn School of Business, University College Dublin, Ireland
(Published in Accounting and Business Research, 41(5)(2011): 415-437)
Address for correspondence: Doris Merkl-Davies, Bangor Business School, Bangor University, Bangor,
Gwynedd LL57 2DG, Great Britain. Tel.: 0044-(0)1248-382120; abs213@bangor.ac.uk.
2. Abstract
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.
Keywords: Discretionary narrative disclosures, Impression management, Rationality.
ii
3. A Conceptual Framework of Impression Management:
New insights from psychology, sociology and critical perspectives
1. INTRODUCTION
This paper identifies and challenges assumptions on the rationality and motivation for
managerial impression management and organisational audiences’ responses to it, in order to
disrupt the reproduction and continuation of the line of reasoning inherent in the predominant
economics-based perspective on impression in a corporate reporting context. The concept of
impression management originates in social psychology and is concerned with ‘studying how
individuals present themselves to others to be perceived favourably by others’
(Hooghiemstra, 2000, p.60). Using a dramaturgical metaphor, Goffman (1959) explains
impression management as the performance of self vis-à-vis an audience. Accounting
research applies the concept of impression management in a corporate reporting context to
explain discretionary narrative disclosures. Management is assumed to strategically ‘select...
the information [in corporate narrative documents] to display and present... that information
in a manner that is intended to distort readers’ perceptions of corporate achievements’
(Godfrey et al., 2003, p.96).
The predominant perspective on impression management in a corporate reporting context is
informed by economics-based theories, particularly agency theory (Merkl-Davies and
Brennan, 2007). Agency theory focuses on the relationship between managers and investors
which is characterised by contractual obligations and utility maximisation. Both managers
and shareholders are regarded as rational, self-interested decision-makers. This means that
decision-making is assumed to correspond to mathematical models and motivation is
perceived in strictly in utilitarian terms. Corporate reporting and investment decisions are
taken on the basis of cost-benefit calculations and involve responding to inputs from the
external environment. Since managers operate ‘in an environment in which their
remuneration and wealth is linked to the financial performance of the companies that employ
them, management has economic incentives to disclose messages that convey good
performance more clearly than those conveying bad performance’ (Rutherford, 2003, p.189).
Agency theory provides a narrow view of impression management as it focuses solely on the
relationship between managers and investors, focuses on reporting bias with respect to the
financial performance of the firm, and conceptualises impression management as the strategic
use of discretionary narrative disclosures. The role of corporate reporting in mediating the
3
4. relationship between management and stakeholders and biased reporting of social and
environmental performance, is ignored. The relationship between managers and investors is
regarded solely in terms of market exchange (Mouck, 1995).
In this paper, we put forward four explanations for discretionary narrative disclosures. The
first (1) is based on an economic perspective. Discretionary narrative disclosures are regarded
as opportunistic impression management. Managers are assumed to manipulate the
presentation and disclosure of information in corporate narrative documents resulting in
reporting bias in order to mislead investors about organisational outcomes. Investors are
assumed to be unable to assess the reporting bias in the short term. Three alternative
explanations of discretionary narrative disclosures are (2) incremental information, (3) hubris,
or (4) retrospective sense-making (see Figure 1 for an overview of four alternative
explanations of discretionary narrative disclosures). The incremental information explanation
is based on an assumption of investor rationality and semi-strong market efficiency. The
efficient market hypothesis states that all market participants have rational expectations about
future returns, which implies that, on average, the market is able to assess reporting bias
(Hand, 1990). This assumes that biased reporting (including impression management) would
lead to higher cost of capital and reduced share price performance. As managers’
compensation is linked to share price performance, managers have no economic incentives to
engage in impression management. Advocates of the incremental information explanation
deny the existence of impression management (Baginski et al., 2000, 2004). Discretionary
disclosure strategies, such as the disclosure of pro-forma earnings or the adoption of a
positive tone in corporate narrative documents, are thus interpreted as useful incremental
information, rather than impression management.
Biased reporting can also be due to managerial hubris. The word ‘hubris’ originates in
ancient Greek mythology where it is used to describe the flaws (hamartia) of rulers or heroes.
It refers to excessive pride in individuals which manifests itself in a sub-conscious cognitive
bias. Such individuals in positions of power may irrationally take actions or make decisions
that prove to be risky or grandiose, but which they believe are within their control. Corporate
narratives may exhibit signs of narcissistic speak (Amernic and Craig, 2007, p. 27), a key
precursor to hubris. Owen and Davidson (2009) develop a set of fourteen indicators of hubris.
Individuals who exhibit three or more of these are regarded as suffering from hubris
syndrome. Whereas impression management constitutes opportunistic managerial behaviour
4
5. with the purpose of manipulating organisational audiences’ perceptions of the firm and its
performance, hubris constitutes self-deception or egocentric bias. Egocentric bias is ‘a
dispositional tendency to think of oneself in a favourable light’ (Barrick and Mount, 1996,
p.262) and arises from the desire to protect one’s self-esteem. This results in managers being
biased towards their own performance. Finally, in an accountability context, particularly in
the annual report, discretionary narrative disclosures may also be the result of managerial
retrospective sense-making. This entails managers providing an account of organisational
actions and events by retrospectively assigning causes to them (Aerts, 2005).
The objective of the paper is to identify, classify and challenge assumptions regarding the
rationality and motivation of managers and organisational audiences. For this purpose, we
provide a conceptual framework of impression management in a corporate reporting context.
Conceptual frameworks define the main ideas in an area of study and the network of
relationships between them (Callahan, 2010). Focusing on two key concepts, namely
rationality and motivation, we relate relevant theories and empirical research in order to
systematise, advance and challenge research on impression management. The literature is
either silent, or in some cases confused, about the often implicit theoretical underpinnings
and assumptions underlying the research. In particular, assumptions regarding the rationality
of managers and organisational audiences, managerial motivation to engage in impression
management, reasons for susceptibility to impression management, and manifestations of
impression management in corporate narrative documents, are not spelled out. We develop a
taxonomy
based
on
four
perspectives,
namely
(1)
the
economic,
(2)
the
psychological/behavioural, (3) the sociological, and (4) the critical, which provide alternative
ways of conceptualising impression management in a corporate reporting context (see
Figures 1 and 2). The alternative perspectives put forward in the paper are not necessarily
competing explanations. Rather, they represent different ways of seeing the same
phenomenon.
The paper makes the following five contributions to the literature. First, the range of
assumptions underlying prior research is made explicit in Section 2 of the paper and is
analysed by reference to preparers and users of corporate narrative reports in Figures 1 and 2.
Second, the inconsistencies in some of these assumptions are identified in Section 2. Third, a
taxonomy is put forward in Sections 3 and 4 which is split into a preparer and a user
perspective. Fourth, by making the implicit assumptions of prior research explicit, we
5
6. contribute to an enhanced understanding of impression management in a corporate reporting
context. As discussed in Section 5, this can be used in future research to make predictions and
interpret results (Koonce and Mercer, 2005). Finally, by identifying and challenging the
assumptions underlying the predominant economics-based perspective which entails ‘taking
something that is commonly seen as … natural and turning it into something problematic’
(Sandberg and Alvesson, 2011, p.32) researchers can generate more informed and novel
research questions such as those set out in Section 5.
Section 2 discusses the assumptions regarding the rationality of managers and organisational
audiences and their impact on explanations of discretionary corporate narrative disclosures.
Further, the motivation for engaging in and being susceptible to impression management and
their impact on the way impression management in corporate narrative documents is
conceptualised is discussed. The taxonomy of prior impression management research is set
out in Section 3 (preparer perspective) and Section 4 (user perspective). The paper concludes
in Sections 5 and 6 with opportunities for future research based on the insights generated
from this analysis.
2. THEORETICAL ASSUMPTIONS OF PRIOR RESEARCH
This section contrasts the concept of economic rationality which underlies economics-based
impression management research with alterative views of the decision-making of managers
and organisational audiences by discussing insights from academic disciplines concerned
with ‘the study of men as they live and move and think in the ordinary business of life’
(Marshall, 1962; quoted in Maital, 2004, p.1), particularly cognitive and social psychology,
behavioural economics/finance, sociology and critical perspectives.
2.1 Rationality
Economic rationality originates in rational choice theory and expected utility theory. Rational
choice theory assumes that all choices are made intentionally and strictly opportunistically,
taking account of the expected consequences of each choice (Zarri, 2009, p.4). Expected
utility theory assumes that economic actors are highly rational utility maximisers who
compute the likely effect of any action on their total wealth and choose accordingly.
Economic rationality thus entails making choices which maximise satisfaction, given
preferences (Zarri, 2010, p.562).
6
7. Economic rationality is what Simon (2000, p.26) refers to as ‘‘perfect’ rationality’ and
Mumby and Putnam (1992, p.469) refer to as ‘pure rationality’. It is prospective in the sense
that it involves prospectively generating options. It is economic in the sense that the goals of
economic actors are material gain. Economic rationality thus involves prospectively selecting
the best possible alternative for maximising utility. The preferences of economic agents are
regarded as well-defined, stable and self-centred. All actions are driven by the desire to
maximise objective utility functions. When making decisions, economic agents use all the
information available (Zarri, 2009, p.1). However, the concept of economic rationality is not
an adequate description of the behaviour of managers and investors in relation to the
provision and dissemination of information in corporate narrative documents. It is abstracted
from the real world which is characterised by ‘uncertainty and imperfect knowledge;
ambiguous and heterogeneous expectations, abilities, and preferences on the part of both
management and all the groups which interact with the firm; competing and conflicting
demands upon the firm; and dynamic and obscure relationships between strategies and
outcomes’ (Hines, 1989, p.65).
Decision-making in the real world is thus influenced by both internal and external factors,
such as memory and time constraints; beliefs about oneself and others; and social rules and
norms. Psychology research shows that managers and investors may suffer from cognitive
and social biases and limitations which affect their decision-making. Decision-making in
real-life situations is characterised by bounded, rather than pure rationality. Bounded
rationality (Simon, 1972, 2000) takes into account that economic actors make decisions based
on incomplete information, by exploring a limited number of alternatives, and by attaching
only approximate values on outcomes (Mumby and Putnam, 1992, p.469). Decision-making
in the real world is not determined by ‘some consistent overall goal and the properties of the
external world, [but rather] by the ‘inner environment’ of people’s minds, both their memory
contents and their processes’ (Simon, 2000, p.25). This results in satisfactory, rather than
optimal outcomes. Bounded rationality thus constitutes a modified form of ‘pure’ or
economic rationality based on satisficing, rather than optimising (Mumby and Putnam, 1992).
Bounded rationality explains why investors are prone to cognitive and social biases and thus
are susceptible to impression management. It explains why managers may assess their own
abilities in a biased manner manifesting itself in hubris –‘exaggerated pride or selfconfidence’ (Hayward and Hambrick, 1997, p.106).
7
8. Both economic rationality and bounded rationality regard decision-making as a cognitive
activity which excludes affective components. Research in behavioural finance and
psychology suggests that emotional factors play a significant role in decision-making. For
example, decision-outcomes may be enhanced by drawing on emotional resources, such as
‘gut feeling’. By contrast, feelings such as anxiety and stress may negatively affect decisionoutcomes. In real-life situations, decision-making is likely to be a holistic process which
combines cognitive and emotional factors (see for example Daniel et al., 2002).1
Both economic rationality and bounded rationality are types of instrumental rationality or
rationality of means which involves ‘applying appropriate reason to choose the best possible
means to attain one’s ends’ (Tomer, 2008, p.1704). In this context, decisions not based on the
best possible means to achieve given ends are considered irrational. Decision-making always
takes place in a social context and is thus influenced by social norms and rules. This requires
a shift from instrumental rationality to substantive rationality which is concerned with ideals,
goals and ends which are pursued for their own sake, such as equality, justice, freedom,
respect for the environment (Weber, 1968). Substantive rationality is a rationality of ends
which involves applying appropriate reason to achieve these ends (Bolan, 1999, p.71). In the
context of corporate narrative reporting, substantive rationality addresses mainly social and
environmental issues, such as fair trade, equality in the workplace and pollution. Firms are
assumed to engage in impression management during incidents which violate social norms
and rules, such as accidents (e.g., Hooghiemstra, 2000), product safety and health incidents
(Elsbach, 1994) and corporate scandals (Breton and Cote, 2006; Linsley and Kajüter, 2008).
In addition, critical researchers regard the notion of rationality as socially constructed (Hines,
1989; Lodh and Gaffikin, 1997). When making decisions, managers give the impression of
rationality in order to be seen to conforming to the rules and norms of society and to forestall
the interference of external agencies in the operation of the organisation (Hines, 1989). This
may entail the use of accounting logic (Broadbent, 1998) to persuade organisational
audiences of the validity and necessity of potentially controversial actions and decisions, such
as privatisation (Craig and Amernic, 2004b, 2006, 2008).
1
The dichotomy between cognitive and emotional factors can be traced back to the Cartesian model of the
mind. Descartes regarded rationality and emotions to be distinct spheres (Lakoff and Johnson, 1999). However,
emotions, which are associated with the realm of the body, can influence the mind.
8
9. 2.2 Motivation
Explanations of the behaviour of managers and organisational audiences are dependent on the
way the relationship of the organisation with its environment is conceptualised.2 Both
managers’ motives to engage in impression management and investors’ motives to act on the
information provided can be regarded as independent of institutional and social context or
dependent on it. Impression management and responses to it can thus be regarded as
determined by economic (e.g., utility maximisation) or psychological (e.g., the desire to
maximise rewards and minimise sanctions, peer pressure) factors or external constraints, such
as social norms and rules (e.g., social legitimacy) or belief systems (e.g., capitalism).
The concept of economic rationality that underlies the majority of impression management
research assumes that mangers are driven to provide corporate narrative disclosures and to
engage in impression management by utility maximisation, i.e. increased compensation in the
form of salary and bonuses for management and future cash flows for investors. Economic
agents may engage in rational behaviour in the sense that they choose the best possible means
to achieve their ends, but the ends are not necessarily ‘what economists had supposed’
(Camerer et al., 2003, p.1216; quoted in Zarri, 2009, p.2). By contrast, research in social
psychology indicates that impression management may be motivated by the social ‘presence’
of others whose behaviour management is trying to anticipate (Allport, 1954, p.5). Managers
may be prompted to engage in impression management anticipating that shareholders and
stakeholders may otherwise respond in undesired ways, for example, in the form of
unfavourable analyst reports, credit ratings, or news reports (Prakash and Rappaport, 1977) or
in the form of withdrawing community support from the firm. Impression management thus
serves to counteract such possible negative consequences by controlling the perceptions of
organisational audiences either by biasing the presentation or disclosure of information
before it is released (reporting bias) or by biasing the descriptions of causality of
organisational actions and events (self-serving bias).
Alternatively, managers may be prompted to engage in impression management in order to
respond to the concerns of various stakeholder groups (stakeholder theory) or to conform to
2
The predominant economics-based perspective on impression management is based on a closed-system
concept of the organisation as ‘separate from its environment and encompassing a set of stable and easily
identifiable participants’ (Scott and Davis, 2007, p.31). By contrast, the alternative perspectives (particularly the
sociological and critical perspectives) introduced in this paper are based on an open-system concept of the
organisation as being shaped, supported and infiltrated by its environment (Scott and Davis, 2007).
9
10. social rules and norms (legitimacy theory) (Ng and Tseng, 2008). Managers may adopt
strategies to make their organisational processes or institutionalised practices appear to
conform to social norms and rules (symbolic management) (Boland and Pondy, 1983, p.223;
Ashforth and Gibbs 1990). This is particularly prevalent with respect to social and
environmental reporting where managers may use rhetoric to persuade organisational
audiences of the environmental credentials of the organisation (Livesey, 2002; Alexander,
2009). In this case, impression management is regarded as addressing the substantive
rationality concerns of external parties. Managers may engage in impression management as
a means of legitimising actions and in order to justify decisions (Hooghiemstra, 2000, Aerts
and Cormier, 2009), to deflect criticism (Prasad and Mir, 2002), or to forestall interference by
external parties such as trade unions, government agencies and environmental groups (Hines,
1989).
In the same vein, investor behaviour may be determined by social context and is thus driven
by the behaviour of others, manifesting itself in peer pressure and need for group acceptance.
Investment decisions can be regarded as influenced by consensus judgements and by herd
behaviour. As investors operate in a social context, their decisions may be influenced by
social norms and rules. This means that they may be guided by substantive rationality in the
sense that they use appropriate reason to pursue ends for their own sake, such as investing in
companies addressing social and environmental concerns (Nicholls and Paton, 2010).
2.3 Concepts of impression management
Assumptions of rationality and motivation impact on the way impression management is
conceptualised. Economic rationality assumes that impression management is regarded as the
result of rational purpose-driven behaviour of managers who aim to maximise their utility. It
entails managers introducing reporting bias into corporate narrative documents by
manipulating the presentation and disclosure of information. By contrast, if impression
management is regarded as prompted by the (imagined) presence of shareholders and
stakeholders who judge managerial performance, it is conceptualised as self-serving bias
executed by attributing positive organisational outcomes to internal factors and negative
organisational outcomes to external circumstances (Aerts, 1994, 2001; Clatworthy and Jones,
2003).
10
11. Alternatively, if impression management is regarded as addressing the substantive rationality
concerns of organisational audiences, it is conceptualised as symbolic management. Ashforth
and Gibbs (1990) differentiate between substantive and symbolic management. Substantive
management entails a real change in organisational processes or institutionalised practices,
including corporate reporting. This includes normative, coercive or mimetic isomorphism and
involves, for example, increasing the quantity and quality of environmental information
provided due to stakeholder demand, increasing environmental awareness in society or
environmental reporting practices by other firms. By contrast, symbolic management entails
adopting strategies which make the organisation appear to respond to stakeholder concerns or
to be congruent with society’s norms and expectations. Symbolic management strategies
include (i) espousing socially acceptable goals, (ii) redefining means as ends, and (iii)
ceremonial conformity (i.e. adopting specific practices considered consistent with rational
management, even though they do not improve organisational practices). Firms facing a
major legitimacy threat engage in symbolic management by separating the negative event
(e.g., fraud, scandal, product safety issue) from the organisation as a whole by normalising
accounts (e.g., excuse, apology, justification) and strategic restructuring (e.g. executive
replacement, establishment of monitors or watchdogs). Finally, if rationality is regarded as a
social construct which lends legitimacy to decisions and actions, then impression
management entails conveying an image of organisational rationality by means of
retrospectively assigning causes to events or by means of using accounting concepts or
numbers to frame managerial decisions or organisational outcomes (Aerts, 2005).
2.4 Development of taxonomy
We develop a taxonomy based on four disciplinary perspectives to explain managerial
impression management (Figure 1) and the responses of organisational audiences to
impression
management
(Figure
2),
namely
(1)
the
economic,
2)
the
psychological/behavioural, (3) the sociological, and (4) the critical. These perspectives are
based on different assumptions regarding the type of rationality underlying the behaviour of
managers and organisational audiences and the motivation for providing discretionary
corporate narrative disclosures. They result in conceptualising discretionary narrative
disclosures in corporate narrative documents, including impression management, in different
ways.
11
12. As set out in the introduction, there are four explanations for discretionary corporate narrative
disclosures: (1) incremental information, (2) impression management, (3) hubris, and (4)
retrospective sense-making. One strand of research denies the existence of impression
management and regards discretionary narrative disclosures as incremental information
provided to aid investor decision-making. If both managers and investors are driven by
economic rationality, managers have no motivation to engage in earnings management (and
by extension impression management), as investors are able to ‘undo’ (Healy and Wahlen,
1999, p.369) reporting bias. Rather, managers are assumed to engage in unbiased reporting as
this enhances managerial reputation and compensation (Baginski et al., 2000).3 Alternatively,
if managers are assumed to be driven by economic rationality and investors by bounded
rationality, discretionary narrative disclosures constitute impression management. In this
scenario, self-interested managers are assumed to exploit information asymmetries by
releasing biased information. They may then benefit from increased compensation, via share
options (Adelberg, 1979; Rutherford, 2003; Courtis, 2004a). Cognitive constraints render
investors unable to undo reporting bias. As a result, they revise their expectations regarding
future cash flows, resulting in short-term capital misallocations. Finally, if managers are
assumed to be driven by bounded rationality which biases them towards their own abilities
and performance, discretionary narrative disclosures are regarded as hubris.
Following an economics-based perspective, managerial performance attributions in corporate
narrative documents are assumed to constitute incremental information. Managers have
strong incentives to engage in unbiased reporting, as it enhances their reputation and
compensation (Baginski et al., 2000) and investors weigh disclosures by the credibility of
their sources (Kothari et al., 2009). For example, the purpose of performance attributions in
management forecasts is to hasten the investor expectation adjustment process. By contrast,
Staw et al. (1983) and Lee et al. (2004) assume that rational utility-maximising managers use
self-serving performance attributions in corporate narratives in order to manipulate investor
perceptions of the financial performance of the firm. In a corporate reporting context, the
focus is on organisational outcomes which may either be attributed to internal factors (i.e.
ability, knowledge) or to external circumstances (i.e. macro-economic factors, competition).
Attributions are assumed to be biased, if positive organisational outcomes are attributed to
3
Another strand of research does not deny the existence of impression m management, but regards reporting
bias as ‘cheap talk’ (Benabou and Laroque, 1992) which is ignored by investors (see Figure 2).
12
13. internal circumstances and negative organisational outcomes to external circumstances.
Investors are assumed to be susceptible to impression management and thus exhibit bounded
rather than economic rationality.
Psychological explanations of discretionary corporate narrative disclosures are based on
attribution theory (Heider, 1958; Jones and Davis, 1965; Kelley, 1967). Attribution theory is
concerned with people’s explanations of events. Biased performance attributions are regarded
as motivated either by socio-psychological or by cognitive-psychological factors. The first
interprets biased performance attributions as impression management arising from the
anticipation of potential negative consequences of information releases. This drives managers
to selectively manipulate the descriptions of causality of performance attributions resulting in
self-serving bias. The second regards biased performance attributions as egocentric bias or
hubris arising from the cognitive dissonance between self-image and the evidence of
performance. It reflects a genuine but biased self-assessment arising from a desire to protect
one’s self-image. Egocentric bias is the result of managerial overconfidence or optimism,
rather than a deliberate attempt on the part of management to present organisational
performance in the best possible light (Frink and Ferris, 1998).
Alternatively, attributions may serve an explanatory, rather than a self-serving function. Due
to people’s desire to achieve some control over the social world, they explain events by
means of cause-effect relationships (Forsyth, 1980). In a corporate reporting context this is
referred to as retrospective sense-making (Aerts, 2005). Performance attributions in corporate
reports may be used (i) proactively to shape organisational audiences’ perceptions of
organisational outcomes and events (impression management); (ii) to protect, maintain, or
further beliefs about the self or the organisation (hubris) or (iii) retrospectively to provide an
account of events (retrospective sense-making). This entails the use of retrospective, rather
than prospective rationality. Instrumental rationality is prospective in the sense that it entails
prospectively selecting relevant causal factors and desired outcomes based on a
comprehensive understanding of the situation (Boland and Pondy, 1983). By contrast,
retrospective rationality entails the ex-post rationalisation of decisions in order to give the
impression of rational decision-making (Aerts, 2005). As the psychological perspective
regards market participants as characterised by bounded rationality, investors are assumed to
be susceptible to impression management.
13
14. Sociological explanations of discretionary corporate narrative disclosures are based on
legitimacy theory, stakeholder theory and institutional theory and regard managerial
disclosure behaviour as responding to stakeholder concerns and as a means of demonstrating
organisational legitimacy. Whereas economic and psychological concepts of impression
management regard the concerns of organisational audiences with corporate narrative reports
as driven by instrumental rationality, sociological interpretations see them as motivated by
substantive rationality. Impression management arises in situations where the norms and
values of the firm are inconsistent with those of society (Luft Mobus, 2005, p.495). This
causes managers to engage in symbolic management (Ashforth and Gibbs, 1990) to
(re)establish social legitimacy. As the sociological perspective is concerned with the role of
corporate narrative reports in demonstrating the organisation’s congruence with social norms
and values, it makes no assumptions regarding the instrumental rationality of organisational
audiences and thus their susceptibility to impression management.
Critical perspectives on discretionary corporate narrative disclosures regard the notion of
rationality as socially constructed in the sense that rationality ‘does not intrinsically exist in a
decision or situation, but is socially conferred upon it’ (Hines, 1989, p.66). In this respect,
rationality may be viewed as providing sets of rules for meaningful action. Rationality is a
normative construct of acceptable behaviour in organisations (Mumby and Putnam, 1992).
When making decisions, managers have to be seen to be acting rationally. In this context,
impression management entails presenting an image of the organisation as a rational entity,
often by means of rationalising decisions in order to gain or maintain social legitimacy. This
involves presenting organisational outcomes and events in corporate narrative documents as
resulting from intentional, reasoned and goal-directed behaviour (Mumby and Putnam, 1992).
All four perspectives are based on different concepts of impression management. The
economics-based perspective views impression management as inconsistencies between
reported and actual organisational outcomes and thus conceptualises it as reporting bias. The
psychology-based perspective views impression management as inconsistencies between
reported and actual performance attributions and regards it as self-serving bias. Systemsoriented theories regard impression management as inconsistencies between portrayed and
actual values and conceptualise it as symbolic management. Critical perspectives regard
impression management as inconsistencies between portrayed and actual organisational
14
15. decision-making. Impression management is thus conceptualised as retrospective rationality
and accounting rhetoric.
3. THEORETICAL PERSPECTIVES ON MANAGERIAL IMPRESSION MANAGEMENT
In this section we consider the four perspectives on managerial impression management
summarised in Figure 1.
The assumptions of the predominant economic perspective on managerial impression
management with respect to decision-making and motivation are contrasted with those of
three alternative perspectives, namely cognitive and social psychology, sociology and critical
perspectives. This enriches our understanding of impression management in a corporate
reporting context by providing us with alternative explanations of managerial impression
management.
Figure 1 illustrates that altering assumptions of managerial rationality from ‘pure’ rationality
to bounded rationality results in biased discretionary narrative disclosures to be
conceptualised as hubris, rather than impression management. By contrast, altering
assumptions of managerial motivation from opportunistic (material self-interest in the form
of increased compensation) to informational (decreasing the cost of capital by means of
improved decision-making) results in an alternative explanation of discretionary narrative
disclosures as useful incremental information, rather than impression management. Switching
from instrumental rationality to substantive rationality or rationality as a social construct
leads to alternative concepts of impression management as symbolic management or
retrospective rationality and accounting rhetoric.
15
16. Figure 1: Contrasting predominant and alternative perspectives on managerial impression management
Predominant perspective
Perspectives and
underlying
theories
Economic
rationality
Motivation
Explanations of
narrative
disclosures
Concepts of
impression
management
Information
asymmetry
Informational:
Improve
decision-making
(decrease
cost of capital)
Incremental
information
Information
asymmetry
Sociology:
Legitimacy Theory,
Stakeholder Theory,
Institutional Theory
Social and cognitive
psychology:
Attribution Theory
Economics:
Agency Theory
Type of
rationality
Determinants
Alternative perspectives
Instrumental
rationality
Anticipation of
user reactions
Retrospective
rationality
Managerial
overconfidence
Opportunistic:
Mislead investors
(increase
compensation)
Self-serving:
Forestall negative
impact of
information
Impression
management
Impression
management
Reporting bias
Self-serving bias
Accountability
Critical theories
Substantive
rationality
Rationality as a
social construct
Inconsistency
between firm’s
portrayed and
actual values
Inconsistency
between firm’s decision
making and society’s
norms about decision
making
Ego-centric: Achieve control
over
Avoid
social world
cognitive
dissonance
Strategic:
(Re)establish
organisational
legitimacy
Ideological:
Forestall
interference
Retrospective
Sense-making
Impression
management
Impression
management
Symbolic
management
Retrospective
rationality &
accounting
rhetoric
Hubris
Key: Shading represents impression management, the primary focus of this paper
16
17. 3.1. Economic perspective
The economic perspective regards impression management as a strand of the financial
disclosure literature (Godfrey et al. 2003). Impression management is conceptualised as
biased discretionary narrative disclosures. Managers and investors are assumed to
strategically compete for wealth and thus use the information in corporate narrative
documents as a factor of production with respect to that wealth (Arrington and Puxty, 1991,
p.34). Impression management thus entails managers taking advantage of information
asymmetries by means of manipulating the presentation and disclosure of information in
order to maximise their personal wealth (Adelberg, 1979; Rutherford, 2003; Courtis, 2004a).
Corporate narrative documents serve as impression management vehicles to present a selfinterested view of corporate performance (Bettman and Weitz, 1983, p.166-167; Staw et al.,
1983, p.584; Abrahamson and Park, 1994, p.1302; Mather et al., 2000, p.68; Clatworthy and
Jones, 2006, p.493). As negative organisational outcomes may give rise to conflicts of
interest between managers and shareholders, managers are assumed to ‘distort readers’
perceptions of corporate achievements’ (Godfrey et al., 2003, p.96) by means of obfuscating
failures and emphasising successes (Adelberg, 1979, p.187).
3.2 Social psychology perspective
The social psychology concept of impression management originates in Goffman’s (1959)
dramaturgical metaphor of individuals as actors on a stage performing for an audience.
Impression management is neither the result of rational decision-making which takes the
expected consequences of each choice into account, nor entirely motivated by material gain.
By contrast, it is regarded as embedded in and dependent on management’s relationship with
organisational audiences. As it arises from ‘the actual, imagined and implied presence’
(Allport, 1954, p.5) of organisational audiences to whom management is accountable, it is
inherently social in character. Schlenker et al. (1994, p.634) define accountability as ‘the
condition of being answerable to audiences for performing up to certain standards, thereby
fulfilling 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. 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
17
18. (Schlenker, 1997). 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
in order to construct a personal account of events and to provide 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. The experience or anticipation of an evaluative appraisal is crucial to the concept
of accountability.
Managers are accountable to organisational audiences, including shareholders and arguably
stakeholders, for their decisions and actions. Corporate reports, particularly the annual report,
serve as an accountability mechanism which addresses the concerns of external parties
(Stanton and Stanton, 2002). In a corporate reporting context characterised by conditions of
accountability, impression management arises from the inquiry component of the corporate
reporting process. Management engages in impression management in anticipation of an
evaluation of its actions and decisions primarily by shareholders which serves to counteract
undesirable consequences. If corporate narrative documents are regarded as a description of
the decision behaviour of management and thus reflect managerial performance (Prakash and
Rappaport, 1977, p.35), then managers may be prompted to engage in impression
management to counteract undesirable consequences of information releases in the form of
unfavourable analyst reports and credit ratings, negative share price movements and loss of
stakeholder support (Merkl-Davies et al., 2011).
Impression management takes place in the accounting component of the accountability
process where its manifests itself in strategies adopted by management to present a version of
events aimed at winning social and material rewards and avoiding sanctions. This entails the
use of self-serving bias (Aerts, 1994, 2001; Clatworthy and Jones, 2003). 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).
In contrast, Aerts (2005) argues that the accountability context of corporate annual reporting
prompts managers to engage in retrospective sense-making. This concept originates in
18
19. Weick’s (1995) work on organisational sense-making and refers to the interpretation of
events that have already occurred. The analysis by Merkl-Davies et al. (2011) of UK
chairmen’s statements focuses on the linguistic manifestations of the psychological processes
underlying the inquiry component of the corporate reporting process which is characterised
by the managerial anticipation of the feedback effects of information. They find that
managers do not use chairmen’s statements for impression management purposes, but to
engage in sense-making by means of retrospective framing of organisational outcomes.
Alternatively, managerial information processing may be characterised by bounded
rationality. When accounting for organisational outcomes managers may provide biased
performance explanations in order to enhance their own self-esteem by means attributing
positive organisational outcomes to their own efforts and negative organisational outcomes to
external factors beyond their control (egocentric bias). This egocentric bias serves the
purpose of protecting, maintaining, or extending their beliefs about themselves or about their
environment ‘which would be rejected if attributions followed from observations in a strictly
rational manner’ (Forsyth, 1980, p.185). In the accounting literature, this egocentric bias is
referred to as overconfidence bias or hubris. Hubris manifests itself in managerial optimism
about future outcomes, overconfidence about forecasting ability and assigning too much
weight to confirming than disconfirming evidence. Hubris is a concept which has been
predominantly applied in explaining managerial dispositions and motives for mergers. Liu
and Taffler (2008) investigate managerial optimism in the CEO discourse of Securities and
Exchange Commission 8k filings of firms engaged in mergers or takeovers as a proxy for
managerial overconfidence.
3.3. Sociology perspective
The sociology perspective regards corporate narrative reporting as determined by structural
constraints exerted either by various stakeholder groups or by society at large. Decisionmaking is regarded as being affected by ‘the dictates of consensually developed systems of
norms and values, internalised through socialisation’ (Granovetter, 1985, p.483). Decisionmaking is driven by substantive rather than instrumental rationality. Stakeholder theory
regards impression management as an attempt on the part of management to react to the
concerns of various stakeholder groups or to respond to public pressure and media attention
(Hooghiemstra, 2000). Legitimacy theory regards impression management as arising from
inconsistencies between the firm’s and society’s norms and values. It constitutes an attempt
19
20. on the part of management to gain or restore organisational legitimacy by seemingly aligning
the firm’s norms and values with that of society, particularly in situations where firms face
legitimacy threats, such as corporate scandals, product safety issues and environmental
disasters.
As described earlier, firms engage in symbolic management to give the impression that their
activities are congruent with society’s norms and values. Symbolic management strategies
include (i) espousing socially acceptable goals, (ii) redefining means as ends, (iii) ceremonial
conformity (i.e. adopting specific practices considered consistent with rational management,
even though they do not improve organisational practices), and (iv) separating negative
events or organisational outcomes from the organisation as a whole. When organisations are
involved in major legitimacy threatening events, such as an environmental disaster, a fraud,
or a product recall, they aim to portray the incident as an isolated event (Suchman, 1995). For
this purpose, they provide normalising accounts and engage in strategic restructuring.
Normalising accounts are verbal remedial strategies, such as justifications, excuses and
apologies whose purpose is to repair organisational legitimacy and reputation. Strategic
restructuring entails the organisation “selectively confess[ing] that limited aspects of its
operations were flawed” (Suchman, 1995, p.598) and then decisively and visibly remedying
the flawed operations. This is achieved by introducing small and narrowly tailored changes,
such as creating monitors and watchdogs, and symbolically distancing the organisation from
negative influences by disassociation, for example, by executive replacement. Espousing
socially acceptable goals involves, for example, claiming customer-focus or equal
opportunities employer status, when, in effect, the opposite is the case. Redefining means as
ends involves recasting the meaning of its ends or means, for example by justifying the
closure of employee pension schemes on the basis of the introduction of a new accounting
standard. Finally, an example of ceremonial conformity is public sector organisations
producing extensive annual reports in an attempt to emulate reporting practices in the private
sector or organisational restructuring to distance the organisation from a negative event, such
a financial fraud (Linsley and Kajüter, 2008).
Impression management in a corporate reporting context is regarded as an attempt to affect
the public’s perceptions of the company (Hooghiemstra, 2000, Aerts and Cormier, 2009),
either by proactively shaping stakeholders’ impressions of the organisation (i.e.,
organisational change in the form of structural organisation or privatisation; e.g. Arndt and
20
21. Bigelow, 2000) or by reactively responding to stakeholder concerns, increased scrutiny by the
media, or public pressure in the wake of a corporate scandal or environmental disaster (e.g.,
Elsbach, 1994; Hooghiemstra, 2000; Breton and Cote, 2006; Linsley and Kajüter, 2008;
Lightstone and Driscoll, 2008; O’Keefe and Conway, 2008).
3.4 Critical perspective
The critical perspective questions assumptions of instrumental rationality which underlies
mainstream impression management research. Corporate reporting decisions are assumed not
to be primarily driven by self-interested utility maximisation, but are ideological in the sense
that corporate narrative documents “privilege…language and thought rooted in managerial
capitalism” (Craig and Amernic, 2004a, p.814), while marginalising the perspective of the
public.
If rationality is a social construct, managers may use corporate narrative documents to give
the impression of rational decision-making. Organisational legitimacy is achieved by
conforming to social ideologies of rational decision-making. In this scenario, impression
management arises from the desire to be seen to conform to the rules and norms of society
and to forestall the interference of external agencies in the operation of the organisation
(Hines, 1989). Similarly, Mumby and Putnam (1992) argue that rationality is a normative
construct of acceptable behaviour in organisations. In order to gain or maintain social
legitimacy, managers have to present organisational outcomes and events in corporate
narrative documents as resulting from intentional, reasoned and goal-directed behaviour. This
involves constructing a retrospective account of organisational outcomes and events and
providing reasons for their occurrence (Aerts, 2005). Retrospective rationality thus restores
social legitimacy of organisational agents as rational decision-makers. In a longitudinal study
of Amcor’s annual reports, White and Hanson (2000, p.307) note that ‘the more uncertain the
general environment became, the more … Amcor intensified its self-presentation as rational’.
Management may use rationality to justify actions and decisions. For this purpose,
management may use accounting numbers and concepts to frame managerial decisions or
organisational outcomes. Due to its emphasis on objectivity, measurability and lack of
ambiguity, the use of ‘accounting rhetoric’ (for example, Craig and Amernic, 2004a; Hanson
and White, 2003) or ‘accounting logic’ (Broadbent, 1998) lends validity, legitimacy and
credibility to managerial decisions and actions. Organisational legitimacy is achieved by
21
22. conforming to social ideologies of rational decision-making. Impression management thus
entails the use of rationality to obscure ‘the ‘real’ decision processes which are political”
(Jones, 1992, p.235). For example, in their analysis of the discourse of privatisation in the
annual letters to shareholders of Canadian National Railway, Craig and Amernic (2008,
p.1087) demonstrate how accounting performance measures and accounting language “have
been invoked to show that the vision of the promoters of the privatisation has been achieved,
and that the decision to privatise has been a sagacious one”.
Corporate narrative documents are used by managers to establish and maintain unequal
power relationships in society in the way that they represent things and position people.
Language is regarded as a medium through which prevailing power relations are articulated.
Managers are viewed as powerful organisational actors who use corporate narrative
documents to provide a hegemonic account of organisational outcomes, often by means of
using dominant discourses. For example, in their analysis of 2001 Southwest Airlines’ Letter
to Shareholders, Amernic and Craig (2004) highlight how management appropriates
symbolic representations to show their company in a positive light. They demonstrate the use
of language in corporate narrative documents to be political.
4. THEORETICAL PERSPECTIVES ON RESPONSES TO IMPRESSION MANAGEMENT
A taxonomy capturing the user perspective which mirrors that of the preparer perspective is
developed in Figure 2. This taxonomy consists of four perspectives: the two predominant
perspectives derived from (1) economics and (2) behavioural finance/economics; and two
alternative perspectives grounded in (3) sociology and (4) critical perspectives.
Figure 2 illustrates that the assumption of ‘pure’ investor rationality results in reporting bias
to be conceptualised as ‘cheap talk’ which is ignored by investors.4 Under assumptions of
bounded investor rationality, impression management results in short-term revisions of
expectations about future cash flows. As shown in Figure 1, switching from instrumental
rationality to substantive rationality and rationality as a social construct leads to alternative
concepts of impression management as either symbolic management or retrospective
rationality and accounting rhetoric. This also goes hand-in-hand with widening the concept of
organisational audiences to include various stakeholder groups and the general public.
4
The reporting bias may either be due to impression management or due to managerial hubris.
22
23. Figure 2: Contrasting predominant and alternative perspectives on responses to impression management
Predominant perspectives
Theoretical
origins
Economics
Type of
rationality
Economic
rationality
Determinants
Information
asymmetry &
‘pure’ rationality:
Investors able to
‘undo’ reporting
bias
Motivation
Consequences
Ceoncepts of
impression
management
Material self-interest:
Utility maximisation
No capital misallocations:
Investors ignore
reporting bias
‘Cheap talk’
Alternative perspectives
Behavioural
economics/finance
Sociology
Critical theories
Instrumental
rationality
Substantive
rationality
Rationality as
a social
construct
Information
asymmetry &
bounded rationality:
Investors unable to
‘undo’ reporting bias
due to cognitive,
social and emotional
constraints
Material self-interest:
Utility maximisation
Capital misallocations:
Investor revise their
expectations in the
short term
Impression
management:
Reporting bias
Stakeholders/public
unable to see through
symbolic management
Public unable to
see through
retrospective
sense-making
and accounting
rhetoric
Social & environmental
goals
Social & political
goals
Continued
shareholder &
stakeholder support
Strengthening of
status quo
Impression
management:
Symbolic
management
Impression
management:
Retrospective
rationality &
accounting
rhetoric
Key: Shading represents impression management, the primary focus of this paper
4.1. Economics perspective
Mainstream finance theories assume that investors behave rationally and that share prices
incorporate information about the firm in a timely and unbiased manner. Under agency
theory, investors can take for granted that managers act in their self-interest, rationally
responding to incentives shaped by compensation contracts, the market for corporate control
and other corporate governance mechanisms. The rational actor model assumes that people
unemotionally maximise expected utility functions (Huang, 2003, p.2). In semi-strong capital
markets, rational investors are assumed to regard biased information disclosures as ‘cheap
talk’ (Benabou and Laroque, 1992) and ignore them, as such disclosures are costless to
managers and difficult to verify. Demers and Vega (2010) find that investors disregard
managerial optimism in earnings announcements, unless it is verified by outside sources such
as financial analysts and the media, and it is accompanied by hard information.
4.2. Behavioural finance/economics perspective
Investors are only susceptible to impression management, if their decision-making is
considered to be characterised by bounded rationality. This renders investors unable to assess
23
24. reporting bias as a result of a variety of cognitive, social and emotional biases. The concept of
bounded rationality originates in cognitive psychology and is used in behavioural
finance/economics research to study decision-making under risk and uncertainty (Kahneman
and Tversky, 1979). Bounded rationality results in investors being unable to assess
information in an unbiased and timely manner as a result of time constraints and cognitive
and affective biases, such as hindsight bias, the primacy/recency effects (individuals more
influenced by the first/last information item (Einhorn and Hogarth 1981)) and the bandwagon
effect (see Olsen (1998) for a full list of biases impacting on investor decision-making). The
incomplete revelation hypothesis views time constraints on the part of investors as a factor in
investor susceptibility to impression management (Bloomfield, 2002). Information that is
more costly to extract from publicly available data is less completely reflected in market
prices. The easier information is to extract, the more it is impounded into share prices. Bowen
et al. (2005) use the incomplete revelation hypothesis to explain investor reactions to
impression management in the form of emphasising income-increasing pro-forma earnings
numbers. They find that firms with low value relevance of earnings and greater media
exposure place less emphasis on GAAP earnings and greater relative emphasis on pro forma
earnings (i.e., they visually direct readers’ attention to the earnings number which shows
financial performance in the best possible light). Li (2008) also invokes the incomplete
revelation hypothesis to explain that managers may choose to manipulate syntactic features to
render the annual reports of poorly performing firms difficult to read in order to increase the
time and effort for investors to extract information. The belief-adjustment model (Einhorn
and Hogarth 1981) suggests that information processing is affected by the ordering of
information. Investors may be either biased towards information presented first (primacy
effect) or towards information presented last (recency effect). Thus, investors may attribute
less weight to bad news and more weight to good news, depending on the order in which they
are presented. Baird and Zelin (2000) test the belief-adjustment model and find that the
ordering of good and bad news can influence investor perceptions. Evidence on how
unsophisticated investors cognitively process pro forma earnings information is provided by
Fredrickson and Miller (2004). Cognitive processes are divided between information
acquisition and information evaluation. They find that investors are subject to unintentional
cognitive biases, rather than consciously perceiving information to be informative. These
unintentional cognitive biases are attributed to cognitive limitations arising from their lack of
expertise and the use of ill-defined valuation models. Krische (2005) also finds unintentional
investor evaluation effects arising from memory limitations. Similar to Krische (2005), Elliott
24
25. (2006) attributes unsophisticated investor responses to the emphasis of pro forma earnings to
unintentional cognitive effects. She posits that investors may overweigh a less important cue
simply because it is emphasised. Managers exploit this salience effect to influence investor
perceptions of organisational outcomes by emphasising the earnings metric that portrays
financial performance in a positive light.
The investor decision-making process is driven not only by the quality of securities’
underlying technical fundamentals, but also by affective evaluation (MacGregor et al., 2000;
MacGregor, 2002; Pixley, 2002; Dreman, 2004). MacGregor et al. (2000) and MacGregor
(2002) find that affective evaluation is based on the image associated with a particular
company. In particular, MacGregor (2002) finds image evaluations to be correlated with
financial judgments. Firms can exploit this association to their advantage by pro-actively
manipulating their image and thus the perceptions of firm performance and prospects. The
emotional impact of presentational effects has been studied in the context of visual
information. Courtis (2004b) examines the effect of colour in annual reports and finds that
some colours are associated with more (or less) favourable perceptions and investment
judgements. However, it may also be present in verbal information, as language is an ideal
medium for conveying emotion (MacGregor, 2002, p.20). Thus, readers of corporate
narrative documents may be influenced by emotionally charged language, particularly
similes, metaphors and other rhetorical figures. Cianci and Kaplan (2010) consider the
influence of trust on investors’ judgements of management explanations for poor firm
performance. They examine the influence of CEO reputation and the plausibility of
management explanations, finding that investor judgements are not influenced by CEO
reputation.
4.3 Sociology perspective
The sociological perspective conceptualises impression management as symbolic
management. Management manipulates audience’s perceptions of the congruence of
organisational practices with social norms and rules. The focus of analysis is on perceptions
of organisational legitimacy. Research investigates the impact of impression management
relating to organisations’ environmental performance on organisational audiences. Archival
research predominates. This entails assessing shareholder perceptions by means of share price
reactions and stakeholder perceptions by means of media accounts. Applying institutional
theory, Bansal and Clelland (2004) investigate shareholder responses to corporate
25
26. environmental legitimacy and impression management relating to environmental performance
(disclosure of environmental liabilities and expression of environmental commitment).
Investors are assumed to assess corporate environmental legitimacy according to the firm’s
conformity to accepted social norms and rules. They find that firms which adopt institutional
norms gain legitimacy which lowers their unsystematic stock market risk. Berrone et al.
(2009) investigate organisational audiences’ perceptions of corporate environmental
legitimacy. They find that symbolic management does not have the same impact on
environmental legitimacy compared to substantive management. They conclude that
symbolic management is not unimportant in the sense that symbolic and substantive
management are complementary, rather than supplementary.
4.4 Critical perspective
We are unaware of accounting research exploring whether readers of corporate narrative
documents are persuaded by the use of retrospective rationality and accounting rhetoric to
give the impression of rational decision-making and/or to persuade organisational audiences
about the validity and legitimacy of managerial actions and decisions. Research in linguistics
suggests that rhetoric constitutes an effective means of giving universal status to particular
discourses, for example the discourse of New Public Management which includes the use of
accounting rhetoric to persuade audiences of the advantages of a market orientation in the
public sector (Fairclough, 2003). If audiences are persuaded by the use of accounting
concepts and numbers in corporate narrative documents to justify managerial actions and
decisions, this reinforces the status quo by promoting ignorance in the sense that ‘the
company maintain[s] a privileged position regarding information by keeping society unaware
of alternative avenues of consumption, or systems of organisation or its present and future
performance’ (Simpson, 2000, p.245).
5. IMPLICATIONS FOR FUTURE RESEARCH
This paper commenced with a criticism of the narrow concept of economic rationality which
underlies the predominant economics-based approach to impression management research
(Merkl-Davies and Brennan, 2007). Research based on economic rationality assumes that the
decision-making of organisational actors and audiences involves taking the expected
consequences of each choice into account and that these decisions are driven by selfinterested utility-maximisation. This is reductionist in the sense that managerial corporate
reporting decisions and responses to these decisions are regarded as abstracted from real
26
27. decision-making, as driven by a narrow view of human behaviour based on prospective
rationality, and as motivated solely by material gain.
We introduce alternative concepts of impression management based on theories from
psychology/behavioural finance, sociology and critical perspectives and using different
assumptions regarding the rationality and motivation of managers and organisational
audiences. These inform the way discretionary corporate narrative disclosures are interpreted
and the way impression management is conceptualised. By making these underlying
assumptions explicit, we contribute to the quality of future research by highlighting the
importance of consistency between underlying assumptions, predictions and interpretations of
results. Identifying, classifying and challenging assumptions regarding the rationality and
motivation of managers and organisational audiences may help researchers to think
differently about what is already known (Foucault, 1985).
5.1 Concepts of impression management
Depending on the disciplinary perspective adopted and the focus of analysis (i.e. management
versus organisational audiences), impression management is conceptualised as opportunistic
managerial discretionary disclosure behaviour, reporting bias, self-serving bias, symbolic
management and cheap talk. Insights from psychology, sociology and critical perspectives
show impression management as a multifaceted and complex phenomenon aimed at shaping
the perceptions of a wide range of outside parties. Sociological and critical approaches shift
the focus of analysis away from specific impression management tactics to broader strategies
used to present a particular version of events, such as rhetoric (see, for example, Driscoll and
Crombie, 2001; Livesey, 2002; Craig and Amernic, 2004b, 2006, 2008) or symbolic
management (see, for example Linsley and Kajüter, 2008). This necessitates a more
qualitative, in-depth analysis of corporate narrative documents aimed at uncovering how
impressions are constructed.
Relatively little is known about the influence of the content and presentation of corporate
narrative documents on organisational audiences. Corporate report readers have been profiled
in terms of their sophistication (sophisticated and unsophisticated) and their information
acquisition strategies (goal directed/purposeful and incidental/random) (Courtis, 2000, p.255–
58; Courtis and Hassan, 2002, p.398–99). The former acquire information by seeking answers
to preconceived questions and search sections of the annual report for answers to specific
27
28. questions, while the latter merely browse through the annual report and read bits and pieces
as take their fancy. There is little evidence on the information acquisition strategies
undertaken by different strata of that audience. The relationship between information
inductance, framing and impression management has also not been adequately explored.
These questions need to be addressed in future research.
5.2 New methodological approaches
The majority of impression management research is archival. Research on the preparer
perspective is primarily based on text analysis. The problem with archival research is that the
underlying decision-processes and motivations have to be inferred. This problem may be
overcome in future research by using methods which allow a more direct access to
organisation actors’ decision-making and motivation. The concepts introduced in this study
can be used by researchers as a theoretical framework to inform their interactions with
organisational actors and audiences in field studies and interviews. There is some research on
the drivers of disclosures in the narrative documents of various organisations. Findings
suggest that different disclosure positions may co-exist in one firm (Gibbins et al., 1990;
Adams, 1997) and that disclosure positions may differ across different corporate narrative
documents (Jetty and Beattie, 2009). This means that impression management is part of the
disclosures made within one particular narrative document, that different manifestations of
impression management may co-exist in one document, and that impression management
may be more prevalent in specific types of corporate narrative documents.
There is less research on the perception of narrative disclosures by organisational audiences.
This is at least partly due to the difficulty of capturing the response of organisational
audiences other than shareholders to impression management by conventional archival
methods. Research on the user perspective predominantly focuses on shareholder responses
to impression management by means of share price reaction studies. Some researchers have
used experimental approaches to proxy shareholder reactions (Stanton et al., 2004; Barton
and Mercer, 2005; Krische, 2005; Elliott, 2006). Bansal and Clelland’s (2004) and Breton
and Cote’s (2006) approach of using media accounts as a proxy for public perception may be
a way forward. Solomon et al. (2009) interview 20 institutional investors in relation to
impression management and private social and environmental reporting. Although their focus
is not on social and environmental disclosures in corporate reports, their study nonetheless
provides an example of a different approach to studying investor perceptions of impression
28
29. management in a corporate reporting context. They find evidence of impression management,
which is of concern, since the objective of private social and environmental disclosures is to
encourage relationship investing by engendering trust, confidence and transparency in the
relationship between companies and their core institutional investors. In conclusion, different
methodological approaches provide opportunities to address new research questions dealing
with preparer and user perspectives.
5.3 Interaction between managers and organisational audiences
Prior research conceptualises impression management as a process consisting of two separate
stages, namely (1) managerial impression management, primarily by means of corporate
narrative documents, such as annual reports and press releases, and (2) audience responses to
impression management. Ginzel et al. (2004) argue that impression management constitutes
an interactive process between managers and audiences. The social psychology perspective of
impression management introduced in Section 3.2 shows that impression management can be
regarded as being triggered by the anticipation of the reactions of information recipients to
managerial disclosures. Ginzel et al. (2004, p.225) argue that this ‘process of reciprocal
influence’ between management and organisational audiences is not necessarily confined to
an ‘initial attempt…to explain an organisation’s actions or performance’. In cases where
impression management attempts are not successful in the sense that audiences are not
convinced, the impression management process extends to a third stage during which
management and audiences attempt to resolve interpretive conflicts regarding the appropriate
interpretation of an event, resulting in possible modifications in interpretations. Driscoll and
Crombie (2001) and Beelitz and Merkl-Davies (2011) are rare examples of studies of
impression management as an interactive process between two parties. Driscoll and Crombie
(2001) analyse a conflict between a large timber firm and a small monastery situated in a
forest where the firm is operating. They find that the timber firm uses language and symbolic
activity strategically to increase its own legitimacy and decrease the legitimacy of the
convent.
5.4 Concluding comments
Impression management is a much richer and more complex phenomenon than suggested by
the predominant economics-based perspective. Insights from disciplines conceptualising the
relationship between managers and organisational audiences as going beyond market
exchange and which either focus on ‘real people, real behaviour, or real reason’ (Maital,
29
30. 2004, p.1) relating to corporate narrative reporting or on the ideological motivation and
effects of corporate narrative reporting allow us to conceptualise impression management in
new ways. For this purpose, we develop a taxonomy which renders rationality assumptions
and motivational components in prior research explicit and classifies prior research into four
distinct perspectives based on these underlying assumptions. This allows us to advance
research by assisting researchers in locating their study within a particular perspective. We
also provide guidance on how to achieve consistency between assumptions, predictions and
interpretation of results, leading to more informed and novel research questions depending on
the impression management concepts adopted, the research methodologies applied and
consideration of the interactions between preparers and users of corporate narrative reports.
30
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