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Narrative style and chairpersons' letters: personal attribute or performance-contingent?

Citation

Cen, J and Hrasky, S and Lee, KGX and Yeoh, C, Narrative style and chairpersons' letters: personal attribute or performance-contingent?, Financial Reporting and Business Communication Research Unit 15th Annual Conference, 7 and 8 July 2011, Bristol University EJ (2011) [Non Refereed Conference Paper]


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Abstract

There is a growing body of research into the area of impression management in corporate annual reports (e.g. Clatworthy & Jones 2001; 2003; 2006; Courtis 2004); Smith & Taffler 1992; 2000). However, as Merkl-Davies and Brennan (2007) identify, it is not clear whether discretionary disclosures reflect a desire to improve information flows to users or whether they result from self-interested opportunistic behaviour. The purpose of this research is to contribute to resolving the impression management/information provision uncertainty by examining the behaviour of individual chairpersons communicating in different corporate contexts. It is not uncommon for an individual to serve as chairperson for more than one company simultaneously and this provides an opportunity to observe whether communicative style varies with the fortunes of the company upon which a chair reports or whether a chair adopts a similar style regardless of corporate performance. The latter is consistent with the information provision argument while the former is potentially reflective of impression management.

Two samples were analysed to explore narrative style in chairperson's letters. The first was drawn from chairpersons of a single company whose company experienced a performance reversal in two consecutive years between 2007 and 2009. The second sample comprises directors who chair more than one company in the ASX500 in adjacent years between 2007 and 2009. To be selected, a company pair must exist such that one company experienced a performance improvement while the other experienced a performance decline in the same reporting year. Pair-wise differences in the length, passivity, readability, personal pronoun usage, and references to numbers and to key financial indicators in chairperson‟s annual report letters were examined. The results suggest that chairs of the same company do not change their linguistic style when reporting on different performance outcomes but are less likely to report financial indicators and make quantitative references in the poor performance year. However, the tendency does not hold when the same chair is reporting on different companies, one with good performance and the other with poor. In that case, there is a tendency to use more passive statements and less personal pronouns and quantitative references in the poor performance year. This apparent anomaly may reflect the role played by annual report design consultants used by different companies or that the responsibility for writing the letter differs across the companies.

Item Details

Item Type:Non Refereed Conference Paper
Keywords:impression management, corporate annual reports, narrative style, chairperson, director
Research Division:Commerce, Management, Tourism and Services
Research Group:Accounting, Auditing and Accountability
Research Field:Accounting Theory and Standards
Objective Division:Expanding Knowledge
Objective Group:Expanding Knowledge
Objective Field:Expanding Knowledge in Commerce, Management, Tourism and Services
Author:Cen, J (Miss Judy Cen)
Author:Hrasky, S (Dr Susan Hrasky)
Author:Lee, KGX (Mr Kevin Lee)
Author:Yeoh, C (Ms Chze Wern Yeoh)
ID Code:76543
Year Published:2011
Deposited By:Accounting and Corporate Governance
Deposited On:2012-03-07
Last Modified:2012-11-21
Downloads:6 View Download Statistics

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