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Narrative tone and earnings persistence
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All data used in this study are publicly available from the sources identified in the paper.This study contributes to the accounting literature on the intersection between earnings quality and the linguistic features of firmsโ financial disclosures. Specifically, it examines the relationship between earnings persistence as an attribute of earnings quality and the tone of United Kingdom annual reports. The expectations-adjustment hypothesis suggests that firms with more persistent earnings streams have incentives to signal their superior earnings quality to capital providers by increasing the positive tone of financial disclosures. Consistent with this hypothesis, this study provides evidence of a positive association between the annual report tone and earnings persistence. Additional analysis reveals that this association is less pronounced in technology firms than non-technology firms. Separating the sample into profit firms and loss firms suggests that the tone is positively associated with the persistence of profits but exhibits no association with the persistence of losses. Disaggregating the tone into positive and negative components indicates that negative tone has a stronger and more negative association with earnings persistence than positive tone. Further, negative tone is negatively associated with earnings persistence in both profit firms and loss firms. In contrast, positive tone is not associated with earnings persistence in profit firms but is negatively associated with earnings persistence in loss firms.The author received no financial support for the research, authorship and / or publication of this article
Attitudes and Perspectives of SMEsโ Sustainability Reporting Toward Transition to the Net Zero Carbon Emissions
Full text linkData availability: Data is available on request from the corresponding author.Working title: 'Attitudes and Perspectives of SMEsโ Sustainability Reporting Toward Transition to the Net Zero Carbon Emissions'Purpose The authors explore the behaviour and perspectives of SMEs' owners towards a greener economy and its implications for net zero carbon emissions target. Design/methodology/approach The authors draw on the mirroring concept and 26 semi-structured interviews with SMEs' owners and managers to provide insights and explore the misalignment between SMEs' actions and perceptions and the technical architecture (and requirements) of achieving net zero carbon emissions in the UK. Findings The authors find that SMEs lack trust and are sceptical about the government's net zero emissions agenda. The authors also find that lack of understanding and perceived benefits, and supply chain complexities (end-to-end emissions) are the key factors hindering SMEs interests in engaging with better carbon emissions management and environmental management system (EMS). Moreover, pressure from external stakeholders, particularly banks and customers, is a strong driver to draw SMEs more effectively with sustainability and environmental impact disclosure. Research limitations/implications The sample is limited to 26 SMEs' owners operating in seven industries. Future research could explore the result in other industries. Further research could also investigate how the sustainability reports produced by SMEs are useful for different user groups' decision-making. This study reinforces the social constructionist approach to advance our understanding of SMEs' actions towards carbon emission management and EMS. Practical implications This study shows how government policies and SMEs' interests can be aligned to achieve the net zero carbon emissions target. Originality/value This is the first study to examine the perceptions and behaviour of SMEs towards the ongoing pursuit of a greener economy in the UK, including the key factors driving their actions and reasoning
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