We explore how publicly listed family and nonfamily firms engage in self-serving attributions in their annual financial reports. We empirically examine how both types of firms emphasize internal attributions for good firm performance (internal-positive attributions) and external attributions for poor firm performance (external-negative attributions). We find that family firms make more external-negative attributions and that the stock market reacts more negatively to external-negative attributions made by family firms. This suggests important theoretical and practical implications for attribution theory and impression management in family firm research.
This paper examines how advertising impacts the information environment in which stocks are priced and whether it serves to benefit or obfuscate the stock pricing environment. We find that advertising leads to stock prices which better anticipate future earnings, suggesting that the information contained within marketing campaigns is price relevant despite its potential for puffery. We find that this result is concentrated in firms with greater information availability as proxied by size and analyst coverage, more sophisticated investors, and periods of low investor sentiment. Altogether, we find as the information environment is richer and investors are more capable of utilizing financial information to invest, advertising becomes a more useful tool in anticipating future operating performance and creating accurate stock prices.
We use attribution theory to show that firms that make more internal attributions to positive performance outcomes engage slack resources more freely for corporate entrepreneurship (CE) than firms that make fewer of such attributions. In addition, we show that the way in which companies make external attributions to performance outcomes moderates this relationship. To examine this empirically, we explore how top management teams discuss the factors that contribute to firm performance. Specifically, we look at attributions provided in the Management's Discussion and Analysis section of the annual reports of 144 pharmaceutical firms over a 2-year period. In line with our predictions, we find that greater internal attribution to positive performance outcomes leads to increased use of slack resources for CE. Furthermore, we find that this effect is stronger when firms make more external attributions to negative performance outcomes than positive performance outcomes.
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