Signing the letter to shareholders: Does the Signatory’s role relate to impression management?
Titolo Rivista: FINANCIAL REPORTING
Autori/Curatori: Saverio Bozzolan, Giovanna Michelon, Marco Mattei, Andrea Giornetti
Anno di pubblicazione:
Dimensione file: 459 KB
Il DOI è il codice a barre della proprietà intellettuale: per saperne di più:
In this paper, we study whether and how impression management in the letter to shareholders (LTS) is affected and related to the role of signatory (i.e. the person whose signature appears in the letter). Specifically, we argue and expect that impression management is associated with the underlying incentives to mislead outsiders that stem from the role of signatory. We find that impression management is more present when Insiders (executives or major shareholders) sign. We also find that the highest level of impression management is when the signatory holds an executive position and is not a major shareholder. Our evidence also suggests that the dichotomous classification between Insiders and Independent Directors is not sufficient to explain cross-sectional variation in impression management.
Jel Code: G39, M41
- Craig R. J., and Brennan N. M. (2012). An exploration of the relationship between language choice in CEO letters to shareholders and corporate reputation, Accounting Forum, 36(3), pp. 166-177.
- Cruz C., Larraza-Kintana M., Garces-Galdeano L., Berrone P. (2014), Are family firms more socially responsible, really?, Entrepreneurship: Theory and Practice, 38(6), pp. 1295-1316.
- Davis A., Tama Sweet I. (2012), Managers’ use of language across alternative disclosure outlets: earnings press releases versus MD&A, Contemporary Accounting Research, 29(3), pp. 804-837.
- DeFond M.L., Park C.W. (2001) The reversal of abnormal accruals and the Market valuation of Earnings surprises, The Accounting Review, 76(3), pp. 375-404.
- Abrahamson E., Amir E. (1996), The information content of the president’s letter to shareholders, Journal of Business Finance and Accounting, 23(8), pp. 1157-1182.
- Aerts W. (2001), Inertia in the attributional content of annual accounting narratives, European Accounting Review, 10(1), pp. 3-32.
- Aerts W. (2005), Picking up the pieces: Impression management in the retrospective attributional framing of accounting outcomes, Accounting, Organizations and Society, 30, pp. 493-517.
- Amernic J., Craig R., Tourish D. (2010), Measuring and Assessing Tone at the Top Using Annual Report CEO Letters. (Edinburgh: The Institute of Chartered Accountants of Scotland).
- Baginski S.P., Demers E., Wang C., Yu J (2011), Understanding the role of language in management forecast press releases, INSEAD Working Paper No. 2011/28/AC. -- Available at SSRN: http://ssrn.com/abstract=1773429 or http://dx.doi.org/10.2139/ssrn.1773429.
- Baird J.E., Zelin R.C. (2000), The effects of information ordering on investor perceptions: An experiment utilizing presidents’ letters, Journal of Financial and Strategic Decisions, 13, pp. 71-81.
- Bamber L.S., Jiang J., Wang I.Y. (2010), What’s my style? The influence of top managers on voluntary corporate financial disclosure, The Accounting Review, 85(4), pp. 1131-1162.
- Barkemeyer R., Comyns B., Figge F., & Napolitano G. (2014), CEO statements in sustainability reports: Substantive information or background noise?, Accounting Forum, 38(4), pp. 241-257.
- Bartlett S.A., Chandler R.A. (1997), The corporate report and the private shareholder: Lee and Tweedie twenty years on, British Accounting Review, 29, pp. 245-61.
- Barton J., Mercer M. (2005), To blame or not to blame: Analysts reactions to explanations of poor management performance, Journal of Accounting and Economics, 39(3), pp. 509-533.
- Beasley M. (1996), An empirical analysis of the relation between the board of director composition and financial statement fraud, Accounting Review, 71, pp. 443-466.
- Berrone P., Cruz C., Gomez-Mejia L., Larraza-Kintana M. (2010), Socioemotional wealth and corporate responses to institutional pressures: Do family-controlled firms pollute less?, Administrative Science Quarterly, 55, pp. 82-113.
- Bournois F, Point S. (2006), A letter from the president: seduction, charm and obfuscation in French CEO letters, Journal of Business Strategy, 27(6), pp. 46-55.
- Bozzolan S. Cho C.H., Michelon G. (2015), Impression management and organizational audiences: The Fiat Group case, Journal of Business Ethics, 126(1), pp. 143-165.
- Brennan N.M., Guillamon-Saorin E., Pierce A. (2009), Impression management: Developing and illustrating a scheme of analysis for narrative disclosures – A methodological note, Accounting, Auditing & Accountability Journal, 22(5), pp. 789-832.
- Brennan N.M., Merkl-Davies D.M. (2011), A conceptual framework of impression management: new insights from psychology, sociology and critical perspectives, Accounting and Business Research, 41(5), pp. 415-437.
- Cho C.H., Roberts R.W., Patten D.M. (2010), The language of US corporate environmental disclosure, Accounting Organizations and Society, 35, pp. 431-443.
- Claessens S., Djankov S., Fan J.P.H., Lang L.H.P. (2002), Disentangling the Incentive and Entrenchment Effects of Large Shareholdings, The Journal of Finance, LVII(6), pp. 2741-2771.
- Clatworthy M.A., Jones M.J. (2003), Financial reporting of good and bad news: evidence from accounting narratives, Accounting and Business Research, 33(3), pp. 171-85.
- DeJong D., Ling Z. (2013), Managers: their effects on accruals and firm policies, Journal of Business Finance & Accounting, 40(1), pp. 82-114.
- Dyreng S.D., Hanlon M., Maydew E.L. (2010), The effects of executives on corporate tax avoidance, The Accounting Review, 85(4), pp. 1163-1189.
- Eng L. L., and Mak Y. T. (2003), Corporate governance and voluntary disclosure, Journal of accounting and public policy, 22(4), pp. 325-345.
- Fama E.F. (1980), Agency problems and the theory or the firm, The Journal of Political Economy, 88(2), pp. 288-307.
- Fama E. F., Jensen M. C. (1983), Separation of ownership and control, The Journal of Law and Economics, 26(2), pp. 301-325.
- Feldman R., Govindaraj S., Livnat J., Segal B. (2010), Management’s tone change, post earnings announcement drift and accruals, Review of Accounting Studies, 15, pp. 915-953.
- Francis J., Huang A.H., Rajgopal S., Zang A.Y. (2008), CEO Reputation and Earnings Quality, Contemporary Accounting Research, 25(1), Spring, pp. 109-147.
- Garcia Osma B., Guillamon-Saorin E. (2011), Corporate governance and impression management in annual results press releases, Accounting, Organizations and Society, pp. 1-22.
- García Meca E., Sánchez Ballesta J. P. (2009), Corporate governance and earnings management: A meta analysis, Corporate governance: an international review, 17(5), pp. 594-610.
- Ge W., Matsumoto D., Zhang J.L. (2011), Do CFOs have style? An empirical investigation of the effect of individual CFOs on Accounting Practices, Contemporary Accounting Research, 28(4), pp. 1141-1179.
- Godfrey J., Mather P., Ramsay A. (2003), Earnings and Impression Management in Financial Reports: the case of CEO change, Abacus, 39(1), pp. 95-123.
- Gomez-Mejia L. R., Larraza-Kintana M., Makri M. (2007), The determinants of executive compensation in family-controlled public corporations, Academy of Management Journal, 46, pp. 226-237.
- Guillamon-Saorin E., Garcia Osma B., Jones M.J. (2012), Opportunistic disclosure in press release headlines, Accounting and Business Research, 42(2), pp. 143-168.
- Hooghiemstra R. (2000), Corporate communication and impression management – new perspectives why companies engage in corporate social reporting, Journal of Business Ethics, 27(1/2), pp. 55-68.
- Hooghiemstra R. (2010), Letters to the shareholders: A content analysis comparison of letters written by CEOs in the United States and Japan, The International Journal of Accounting, 45, pp. 275-300.
- Hope O. K. (2003), Disclosure practices, enforcement of accounting standards, and analysts’ forecast accuracy: An international study, Journal of accounting research, 41(2), pp. 235-272.
- Kimbrough M.D., Wang I.Y. (2014), Are Seemingly Self-Serving Attributions in Earnings Press Releases Plausible? Empirical Evidence, The Accounting Review, 89(2), pp. 635-667.
- Kohut G.F., Segars A.H. (1992), The president’s letter to stockholders: an examination of corporate communication strategy, Journal of Business Communication, 29(1), pp. 7-21.
- Kwak B., Ro B.T., Suk I. (2012), The composition of top management with general counsel and voluntary information disclosure, Journal of Accounting and Economics, 54, pp. 19-41.
- Jiang J., Petroni K.R., Wang I.Y. (2010), CFOs and CEOs: who have the most influence on earnings management?, Journal of Financial Economics, 96, pp. 513-526.
- Lewis B.W., Walls J.L., Dowell W.S. (2013), Difference in degrees: CEO characteristics and firm environmental disclosure, Strategic Management Journal, forthcoming.
- Li F. (2010), The information content of forward-looking statements in corporate filings – A naïve bayesian machine learning approach, Journal of Accounting Research, 48(5), pp. 1049-1102.
- Mäkelä H., Laine M. (2011), A CEO with many messages: Comparing the ideological representations provided by different corporate reports, Accounting Forum, 35(4), pp. 217-231.
- Mather P., Ramsay A. (2007), Do Board Characteristics Influence Impression Management through Graph Selectivity Around CEO Changes?, Australian Accounting Review, 17(42), pp. 84-95.
- Michelon G., Parbonetti A. (2012), The effect of corporate governance on sustainability disclosure, Journal of Management & Governance, 16(3), pp. 477-509.
- Mizruchi M. S. (1996), What do interlocks do? An analysis, critique, and assessment of research on interlocking directorates, Annual Review of Sociology, pp. 271-298.
- McClelland P.L., Liang X., Barker III V.L. (2010), CEO Commitment of the Status Quo: Replication and Extension using content analysis, Journal of Management, 36(5), September, pp. 1251-1277.
- Merkl-Davies D.M., Brennan N. (2007), Discretionary disclosure strategies in corporate narratives: Incremental information or impression management?, Journal of Accounting Literature, 26, pp. 116-196.
- Merkl-Davies D.M., Brennan N. (2011). A conceptual framework of impression management: new insights from psychology, sociology and critical perspectives, Accounting and Business Research, 41(1), pp. 415-437.
- Morck R., Wolfenzon D., Yeung B. (2005), Corporate governance, economic retrench, and growth, Journal of Economic Literature, 63, pp. 655-720.
- Patelli L., Pedrini M. (2014), Is the Optimism in CEO’s Letters to Shareholders Sincere? Impression Management versus Communicative Action during the Economic Crisis, Journal of Business Ethics, 124(1), pp. 19-34.
- Patelli L., Prencipe A. (2007), The relationship between voluntary disclosure and independent directors in the presence of a dominant shareholder, European Accounting Review, 16(1), pp. 5-33.
- Peasnell K.V., Pope P.F., Young S. (2005), Board monitoring and earnings management: Do outside directors influence abnormal accruals?, Journal of Business Finance and Accounting, 32, pp. 1311-1346.
- Schleicher T., Walker M. (2010), Bias in the tone of forward-looking narratives, Accounting and Business Research, 40(4), pp. 371-390.
- Schleicher T. (2012), When is good news really good news?, Accounting and Business Research, 42(5), pp. 547-573.
- Schrand C.M., Walther B.R. (2000), Strategic benchmarks in earnings announcements: the selective disclosure of prior-period earnings components, The Accounting Review, 75(2), pp. 151-177.
- Segars A.H., Kohut G.F. (2001), Strategic communication through the world wide web: an empirical model of effectiveness in the CEO’s letter to shareholders, Journal of Management Studies, 38(4), pp. 535-556.
- Smith M., Taffler R.J. (2000), The chairman’s statement: A content analysis of discretionary narrative disclosures. Accounting, Auditing & Accountability Journal, 13(5), pp. 624-646.
- Spencer S. (2011), Spencer Stuart board index, -- Retrieved from http://www.spencerstuart.com//global.
- Volpin P. (2002), Governance with poor investor protection: evidence from top executive turnover in Italy, Journal of Financial Economics, 64, pp. 61-90.
- Yekini K. C., Adelopo I., Andrikopoulos P., and Yekini S. (2015), Impact of board independence on the quality of community disclosures in annual reports, Accounting Forum, 39(4), pp. 249-267.
- Yermack D. (1996), Higher market valuation for firms with a small board of directors, Journal of Finance and Economics, 40(2), pp. 185-211.
- Zajac E.J., Westphal J.D. (1996), Director Reputation, CEO board power, and the dynamics of board interlocks, Administrative Science Quarterly, 41, pp. 507-529.
Saverio Bozzolan, Giovanna Michelon, Marco Mattei, Andrea Giornetti, in "FINANCIAL REPORTING" 1/2019, pp. 37-82, DOI:10.3280/FR2019-001002