Using the ethnostatistics methodology to reconcile rhetoric and reality: an examination of the management release of Enron’s year end 2000 results

Smith, William L.; Bøje, David M.; Gardner, Carolyn

doi:10.1108/11766090410813337

Cited by 4 publications

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“…Executive salaries are often small in comparison to the size of stock‐based performance incentives. The presentation of financial results may be shaped by management to obfuscate reality, but deception can be detected by realizing that the environment has been manipulated (Smith, Gardner, & Boje, ). Interestingly, Home Depot had always reported selling and store operating expenses separate from the general and administrative expenses.…”

Section: Case Illustrationmentioning

confidence: 99%

Reassessing measures of sustainable firm performance: A consultant's guide to identifying hidden costs in corporate disclosures

2018

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Strategy, management, corporate social responsibility, critical accounting, and other business researchers frequently utilize financial metrics such as return on assets, return on equity, and return on sales as proxy measures for the financial performance of firms. Large data sets offer convenience but exclude the textual data of corporate disclosures that offers critical insight into specific executive actions and social and environmental outcomes. This study looks at the detrimental consequences of the prevalent practice of relying on macrofinancial metrics as measures of firm performance. Insight from the socioeconomic approach to management (SEAM) is then applied to help an external analyst develop the perspective of an internal consultant to identify hidden costs in corporate disclosures. An extensive case on former CEO Robert Nardelli's tenure at Home Depot is presented as an example of applied SEAM theory to explore how a causal network of dysfunctions can be traced through publicly available financial disclosures. The management discussion and analysis as well as the executive incentive compensation formulas serve as a roadmap to discover hidden costs. The study offers a critical perspective of financial disclosures to allow researchers to externally diagnose dysfunctions sooner rather than years later, an insight formerly only available to internal consultants.

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Section: Case Illustrationmentioning

confidence: 99%

Reassessing measures of sustainable firm performance: A consultant's guide to identifying hidden costs in corporate disclosures

2018

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“…We previously established that management can obscure reality when rhetorical strategies are employed. For example, rhetorical strategies were used to persuade stakeholders that the earnings release of Enron showed a financially strong company (Smith et al , 2004). History may be repeating itself where inflammatory rhetoric outweighs sound accounting applications designed to provide unbiased transparency.…”

Section: Storytelling Ethosmentioning

confidence: 99%

The financial crisis and mark‐to‐market accounting

Smith

Bøje

Melendrez

2010

Qualitative Research in Accounting &Amp; Management

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PurposeThe purpose of this paper is to analyze media storytelling and rhetoric surrounding the credibility of the longstanding accounting practice of mark‐to‐market valuation.Design/methodology/approachThe cascading storytelling model of progressive framing by the media of mark‐to‐market valuation was applied to story subsets of the three types of classic Aristotelian rhetorical appeals.FindingsThe authors found that the media blamed the accounting profession's mark‐to‐market valuation practices as substantive cause of recent corporate problems and declines in market values. In addition, the rhetorical framing of mark‐to‐market accounting practices in the media prompted the Financial Accounting Standards Board to a rush to judgment.Research limitations/implicationsThe paper is limited to the analysis of the storytelling included. Different results from other sources may provide another result.Practical implicationsThe failure in the media to address the duality between the logos of accounting and the ethos of the media narratives exacerbated the cascading activation. Understanding this duality may provide a different lens in looking at information dissemination. This is not only relative to stakeholders in making more informed decisions but should also serve as a warning to the profession, to have more voice, to use a rhetorical strategy that can have more saliency in the public arena.Originality/valueThe paper examined storytelling as interplay of retrospective narrative, the presentness of living story, and the antenarratives shaping the future of not only the unfolding economic crisis, but the future of accounting itself. In terms of rhetoric, we extended the application of pathos, ethos, and logos by examining a cascading activation theory model. This is one of the few studies of antenarratives and how through cascade rhetoric the future is shaped.

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“…Theatre method is used to look at how Enron created and presented financial numbers on a Hollywood-style set, to misdirect spectators (analysts, regulators, investors) in an attempt to inflate the value of Enron stock. In prior work (Smith, Gardner, & Boje, 2004), we assessed Enron in terms of the first two moments of ethnostatistics: Level 1, which involves the production of statistics and consideration of where and how numbers originated, and Level 2, which examines the practices used to analyze the numbers. However, we did not examine the third level or moment of ethnostatistics: the rhetoric of interpreting numbers.…”

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confidence: 99%

(Mis)Using Numbers in the Enron Story

Bøje

Gardner

Smith

2006

Organizational Research Methods

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This article investigates the numeric construction, rhetorical moves, and metatheatre (defined as multiple stages for performing organization stories) pertaining to the widely publicized failure of Enron Corporation. The authors thus examine how statistics in financial reports and executive metatheatric presentations were used to persuade Wall Street experts to recommend Enron stock, when the writing was on the fourth wall. The authors' contribution to ethnostatistics is fourfold. First, they show that financial reports and discourse are a suitable and important topic for ethnostatistical analysis. Second, they extend ethnostatistics beyond how academic professionals tell stories with numbers, to how professional practitioners in organizations tell such stories. Third, they show the important role the rhetorical construction of financial performance measures played in the Enron failure. And fourth, they extend ethnostatistics by integrating ethnostatistics' third moment of rhetoric with theatrical theory to show the situated and staged nature of the rhetoric of quantification.

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Using the ethnostatistics methodology to reconcile rhetoric and reality: an examination of the management release of Enron’s year end 2000 results

Cited by 4 publications

References 0 publications

Reassessing measures of sustainable firm performance: A consultant's guide to identifying hidden costs in corporate disclosures

Reassessing measures of sustainable firm performance: A consultant's guide to identifying hidden costs in corporate disclosures

The financial crisis and mark‐to‐market accounting

(Mis)Using Numbers in the Enron Story

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