A longitudinal study of the textual characteristics in the chairman’s statements of Guinness

Abstract

Purpose The purpose of this paper is to longitudinally analyse the evolution of multiple narrative textual characteristics in the chairman’s statements of Guinness from 1948 to 1996, with the aim of studying impression management influences. It attempts to contribute insights on impression management over time. Design/methodology/approach The paper attempts to contribute to external accounting communication literature, by building on the socio-psychological tradition within the functionalist-behavioural transmission perspective. The paper analyses multiple textual characteristics (positive, negative, tentative, future and external references, length, numeric references and first person pronouns) over 49 years and their potential relationship to profitability. Other possible disclosure drivers are also controlled. Findings The findings show that Guinness consistently used qualitative textual characteristics with a self-serving bias, but did not use those with a more quantitative character. Continual profits achieved by the company, and the high corporate/personal reputation of the company/chairpersons, inter alia, may well explain limited evidence of impression management associated with quantitative textual characteristics. The context appears related to the evolution of the broad communication pattern. Practical implications Impression management is likely to be present in some form in corporate disclosures of most companies, not only those companies with losses. If successful, financial reporting quality may be undermined and capital misallocations may result. Companies with a high public exposure such as those with a high reputation or profitability may use impression management in a different way. Originality/value Studies analysing multiple textual characteristics in corporate narratives tend to focus on different companies in a single year, or in two consecutive years. This study analyses multiple textual characteristics over many consecutive years. It also gives an original historical perspective, by studying how impression management relates to its context, as demonstrated by a unique data set. In addition, by using the same company, the possibility that different corporate characteristics between companies will affect results is removed. Moreover, Guinness, a well-known international company, was somewhat unique as it achieved continual profits.

The influence of institutional factors on corporate narratives: A thematic content analysis of Guinness

“…Similar to Moreno et al (2019), the study starts in 1948 as this is the first year the Chairman's Statement was regularly available and ends in 1996, as this was the last annual report produced independently by Guinness -the company merged with Grand Metropolitan to form Diageo plc in 1997. Consequently, 49 Chairman's Statements were examined.…”

“…The Chairman’s Statement is the most widely read section of the annual report (Bartlett and Chandler, 1997), and it functions as a summary of the annual report (Balata and Breton, 2005). 13 Similar to Moreno et al (2019), the study starts in 1948 as this is the first year the Chairman’s Statement was regularly available and ends in 1996, as this was the last annual report produced independently by Guinness – the company merged with Grand Metropolitan to form Diageo plc in 1997. Consequently, 49 Chairman’s Statements were examined.…”

“…The 1996 annual report notes ‘the highest ever pre-tax profit’ of £975 million, on a turnover of £4.73 billion. This same year also saw the end of the Guinness company, as it merged with Grand Metropolitan to form a new entity Diageo plc (Moreno et al, 2019). The 2016 annual report of Diageo shows a global turnover of £15.6 billion, and the group is one of the world’s largest drinks groups.…”

“…Third, although we did not find any direct evidence of the involvement of professional writers in the preparation of the Chairman’s Statement, a potential change over time from the preparation in-house to assistance by advertising or public relations agencies could lead to a drift in the institutional norms, affecting the analysis. Fourth, disclosure may not provide a reliable picture of internal organisational behaviour, and/or it can be used for impression management purposes (see, for example, Brennan and Merkl-Davies, 2013; Leung et al, 2015; Moreno et al, 2019). However, this is not within the focus of this article.…”

“…Cleary et al (2018) examine a short period of the Chairman's Statement, using a family business approach, to analyse the socioemotional wealth of the narratives in comparison with another Irish brewery, Murphy's. Moreno et al (2019) also analyse the Chairman's Statement over time. They, using an analysis software method, focus on the form of the message to analyse if the company managed some textual characteristics in line with impression management.…”