Rhetorical impression management in the letter to shareholders and institutional setting

Abstract

Purpose Using composite style measures of the letter to shareholders, the purpose of this paper is to elaborate dominant rhetorical profiles and qualify them from an impression management (IM) perspective. In addition, the paper examines how institutional differences affect rhetorical profiles by comparing intensity and contingencies of rhetorical profiles of UK and US companies. Design/methodology/approach The authors use automated text analysis to capture linguistic style characteristics of a panel of UK and US companies and employ factor analysis to determine rhetorical profiles. Next, the authors investigate company-level and country-level determinants of a company’s rhetorical stance. Findings The authors document three prominent rhetorical profiles: an emphatic acclaiming stance, a cautious plausibility-based framing position, and a logic-based rationalizing orientation. The profiles represent distinct self-presentational logics and have different readability effects. Rhetorical IM is stronger in US companies, but higher expected scrutiny in the US institutional environment affects sensitivity of rhetorical postures to message credibility and litigation risk, while marginally increasing the less litigation-sensitive defensive framing style in US letters. Originality/value The authors develop replicable archival-based measures of prominent rhetorical IM traits of the shareholder letter, based on composite style features. The authors argue that they are qualitatively different from content-based IM proxies. The authors investigate their institutional and organizational relevance by examining how company features and country-level differences affect incentives and constraints for style-based rhetorical IM.

Exploring the Rhetorical Use of Interactional Metadiscourse: A Comparison of Letters to Shareholders of American and Chinese Financial Companies

“…To date, metadiscourse has been widely applied to variety of genres in casual conversation (Aerts & Yan, 2017;Schiffrin, 1980), school textbooks (Crismore, 1989;Hyland, 2000), science popularisations (Crismore & Farnsworth, 1990), company annual reports (Hyland, 1998), business e-mails (Carrio &Calderon, 2015), postgraduate dissertations (Bunton, 1999), and research articles (Dahl, 2004;Hyland & Jiang, 2016;Kan, 2016;Mu, et al, 2015). A small amount of comparative research has been done.…”

“…By contrast, this study takes the improved metadiscourse framework by Hyland and Tse (2004) and further explores the cross-cultural factors which inherently lead to the distinctive features of interactional metadiscourse between American and Chines corpus. Aerts and Yan (2017) explore rhetorical impression management in the letter to shareholders from a metadiscourse perspective (p. 404) and how a company's institutional context have an influence on incentives and constraints for rhetorical impression management. The study compares the casual language and other metadiscourse devices between USA and UK where English is the native language for speakers.…”

Investor and Firm Perspectives on Impression Management in Earnings Press Releases: Insights from TSX Venture Exchange Firms

“…A growing body of research has investigated impression management from both firm (Merkl-Davies and Brennan, 2007;Loughran and McDonald, 2011;Davis and Tama-Sweet, 2012;Aerts and Cheng, 2012;Aerts and Yan, 2017) and investor perspectives (Henry 2008;Huang et al, 2014;Arslan-Ayaydin et al, 2016). Yet, research gaps remain in both perspectives.…”

“…Mounting empirical literature has investigated a wide range of accounting narrative documents to study how firms engage in impression management. Those studies have provided evidence that, in their disclosure documents, firms emphasize the positive aspects of their performance (Clatworthy and Jones, 2003), emphasize certain themes (Kohut and Segars, 1992), use metaphors (Bujaki and McConomy, 2012), construct linguistic styles such as assertive, defensive, and logic-based cognitive impression management (Aerts and Yan, 2017), manage the tone of words (Arslan-Ayaydin et al, 2016), include or omit certain items of information from discretionary narrative documents , and rhetorically manipulate narrative disclosures (Aerts and Yan, 2017). Thus, based on prior literature, impression management can be defined as managing disclosure documents in a way that manipulates or distorts investors' perceptions of the firm's financial performance (Neu, 1991;Neu et al, 1998;Osma and Guillamon-Saorin, 2011) or organizational outcomes (Smith and Taffler, 2000;Rutherford, 2005;Davison, 2008).…”

“…Many studies are finding that firms are increasingly using their corporate disclosure documents opportunistically to engage in various impression management strategies (Yuthas et al, 2002;Clatworthy and Jones, 2003;Lee et al, 2004;Henry, 2008;Brennan et al, 2009;Aerts and Cheng, 2011;Davis and Tama-Sweet, 2012;Guillamon-Saorin et al, 2012;Huang et al, 2014;Arslan-Ayaydin et al, 2016;Aerts and Yan, 2017;Sandulescu and Albu, 2018). This study focuses on earnings press releases (EPRs), which are voluntary disclosure documents, to study impression management.…”