The informativeness of impression management − financial analysts and rhetorical style of CEO letters

Yan, Beibei; Aerts, Walter; Thewissen, James

doi:10.1108/par-09-2017-0063

Cited by 22 publications

(25 citation statements)

References 82 publications

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“…Then, among accounting narratives, CEO letters present the greatest diversity when it comes to both the variety of the themes covered (Conaway and Wardrope, 2010) and the richness of the vocabulary (Wang et al, 2012). Since, CEO letters is a much less-regulated document, they can be seen as communication tool (Yan et al, 2019). This allows for relatively free expression and the use of linguistic and rhetorical processes in order to persuade potential readers.…”

Section: Why Ceos Communication Can Be Considered As a Source Of Information On Intellectual Capitalmentioning

confidence: 99%

Voluntary disclosure and intellectual capital: how CEOs mobilise discretionary accounting narratives to account for value creation stemming from intellectual capital

Albertini¹,

Berger-Remy²,

Lefrancq

et al. 2021

JAAR

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PurposeThis research aims to contribute to the current discussion led by international accounting bodies on intellectual capital narratives. Before setting a standard, a preliminary step is to highlight intellectual capital components' sources of value. The objective of this exploratory paper is to contribute to the discussion by proposing a detailed description and taxonomy of intellectual capital based on an analysis of discretionary accounting narrative disclosures in CEO letters.Design/methodology/approachTo answer the research question, a computerised lexical content analysis was done of 241 letters from the CEOs of S&P Euro 350 companies addressed to shareholders.FindingsBeyond the required disclosures about balance sheet intangibles, this study brings to light discretionary narratives about human, digital, customer and environmental capital and their interactions. In particular, CEOs are promoting two new themes, environmental capital and digital capital, as major contributors to value creation.Research limitations/implicationsThe limitations of this study are inherent in the media studied, namely the CEOs' letters to shareholders, which were written as part of the firms' official communication.Practical implicationsThe main contribution of the research is a detailed description of the intellectual capital components that CEOs consider to be at the heart of their companies' models to create value. Human and customer capital were already familiar under the previous classification, but CEOs present digital and environmental capital as areas of opportunity or risk in their discretionary narratives.Originality/valueThe article contributes to the current international discussions on intellectual capital by focusing on discretionary accounting narratives. It seeks to provide guidelines concerning future standards in the current stage of intellectual capital research.

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Section: Why Ceos Communication Can Be Considered As a Source Of Information On Intellectual Capitalmentioning

confidence: 99%

Voluntary disclosure and intellectual capital: how CEOs mobilise discretionary accounting narratives to account for value creation stemming from intellectual capital

Albertini¹,

Berger-Remy²,

Lefrancq

et al. 2021

JAAR

View full text Add to dashboard Cite

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“…Financial analysts' forecasting error and dispersion are two measures that can be used to analyse disclosure's usefulness (Lehavy et al, 2011; Yan et al, 2019). Information quality is essential for financial analysts' forecasts (Embong & Hosseini, 2018).…”

Section: Hypothesis Developmentmentioning

confidence: 99%

Banks' voluntary disclosure in the audit committee reports, cost of equity and the mediating role of financial analysts

Sahyoun

Magnan

2022

Int J Auditing

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Voluntary disclosure in the audit committee report is expected to provide additional information about the activities undertaken to protect investors. The Securities and Exchange Commission's (SEC) ultimate aim in initially promulgating audit committee disclosure requirements was to reduce firms' cost of equity. However, prior research finds that voluntary disclosure in the audit committee report is akin to impression management. In 2015, the SEC issued a concept release encouraging audit committees to provide additional voluntary disclosures in their reports beyond mandatory requirements. In that context, this paper analyses the effect of the audit committee voluntary disclosure on the cost of equity, with financial analysts playing a mediating role. The sample comprises the top US bank holding companies from 2006 to 2015. We manually code the voluntary disclosure in audit committee reports using a scoring grid. Results show that audit committee voluntary disclosure increases the cost of equity. In addition, the association between voluntary disclosure and the cost of equity is mediated by financial analysts. Hence, we infer that the impression management undertone of voluntary disclosures affects financial analysts' coverage and forecasting properties, which in turn lead to an increase in the cost of equity. The paper's empirical evidence highlights the effects of impression management disclosure by analysing corporate governance voluntary disclosures, cost of equity and financial analysts and brings the issue to the attention of banking regulators, SEC and investors.

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“…We use summative content analysis technique to analyze AC reporting to shareholders (Hsieh & Shannon, 2005). Our use of AC reports is similar to prior research that relies on non-financial reporting disclosures such as board chair's statements (Clatworthy & Jones, 2006) and CEO's letters to shareholders (Yan et al, 2019). We did not assume a tabula rasa but used our review of AC reporting and FRC (2012) guidelines that describe the role and responsibilities of the AC and its expected response on significant issues.…”

Section: Content Analysismentioning

confidence: 99%

What do audit committees do? Transparency and impression management

2021

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Marking a significant step aimed at making governance more transparent the UK requires audit committees (ACs) to publish a report on their activities. Although regulators continue to emphasise the roles of ACs, there is limited evidence on what the AC does in practice. This paper provides evidence on the nature of AC actions as reported in AC reports relating to external audit, internal audit and financial reporting. We use summative content analysis to analyze AC reports of UK FTSE 350 firms and find that AC actions mainly entail reviewing processes and reports and there is limited incidence of them reporting that they have undertaken investigations into auditing and reporting issues. Moreover, what is reported is mainly general and descriptive of process. Our findings highlight the importance of AC reports providing meaningful information rather than engaging in symbolism. ACs can use their reports to signal their substantive monitoring and how they have contributed to improving auditing and reporting quality. The findings also suggest that future research examining the reviewing, investigating and outsourcing activities of boards and ACs can contribute to a better understanding of the governance process and outcomes.

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The informativeness of impression management − financial analysts and rhetorical style of CEO letters

Cited by 22 publications

References 82 publications

Voluntary disclosure and intellectual capital: how CEOs mobilise discretionary accounting narratives to account for value creation stemming from intellectual capital

Voluntary disclosure and intellectual capital: how CEOs mobilise discretionary accounting narratives to account for value creation stemming from intellectual capital

Banks' voluntary disclosure in the audit committee reports, cost of equity and the mediating role of financial analysts

What do audit committees do? Transparency and impression management

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