60 research outputs found
Isomorfismo ed impression management nei grafici sulla performance ambientale, sociale e di governance nei bilanci
No full textThe aim of the paper is to investigate the main determinants of graphical reporting on environmental, social and governance (ESG) performance and to understand whether impression management and institutional perspectives can help to explain the use of these graphs. Previous studies on graphical reporting, both considering consolidated annual reports and stand-alone sustainability reports, have mainly explained the use of graphs through impression management theories, by showing a selective and distorted use of graphs aimed to portray a favourable view of the firm’s performance. Few studies, on the other hand, have supposed that institutional theory might help to explain the use of graphs. To our knowledge, this is the first paper which focuses on graphs related with the firm’s ESG performance, voluntarily added within consolidated annual reports. Eighty European consolidated annual reports have been investigated through a regression analysis, controlling for size, industry and volatility. It is found, in line with impression management, that firms tend to use more graphs on their ESG performance when their overall financial performance is higher, while the specific environmental, social and governance performance does not seem to drive graphical reporting. These findings suggest that: consolidated annual reports give a priority to economic-financial results and firms are driven, in the choice of non-financial indicators’ graphs, by their overall financial performance, rather than by their specific non-financial performance. In line with institutional theory, it is found that firms tend to replicate the choices made by their market leaders, in the use and content of voluntary graphs. This isomorphic behaviour is stronger when firms face a higher economic uncertainty (estimated by “low” financial performance), in line with mimetic isomorphism. The paper contributes to the voluntary disclosure literature by studying graphical reporting with the lenses of impression management and institutional theories. Both perspectives seem helpful to explain discretional graphical reporting strategies and can be jointly analysed. The paper also provides evidence on the different usage of nonfinancial information in consolidated annual reports rather than in stand-alone sustainability reports. It is suggested to annual reports’ readers to be aware that managers use graphs, even those on the firm’s ESG results, opportunistically and replicating the leaders’ previous reporting choices
Graphical reporting in Italian Annual Reports during the financial crisis: impression management or incremental information?
No full textThis paper investigates whether, before and during the global financial crisis, Italian firms have used financial key performance indicators graphs in the annual reports as impression management tools, to portray a more favourable picture of the firm’s performance than is warranted. This study shows that, during the financial crisis, firms have increased the number of graphs and decreased favourable distortions, although graphs continue to be designed inaccurately. The findings could reflect an increased public scrutiny on the firm’s performance, during the financial crisis. As a theoretical implication, this paper contributes to the existent financial reporting literature by showing that graphs are not necessarily used in line with an agency theory-based impression management, which is the dominant perspective to explain the graphs’ usage in the annual reports during periods of performance upturn. Moreover, it shows that the institutional context can affect voluntary disclosure practices at a firm-level. As a practical implication, this study suggests to annual reports’ readers not to necessarily consider managers as self-serving preparers in their graphical reporting strategies. The study also suggests accounting associations, audit firms and other regulatory bodies to create a set of guidelines for a correct graph’s use and design
Analyst following, country's financial development, and the selective use of graphical information in corporate annual reports
No full textThis article investigates whether and how the demand for information at country and firm levels affects the selective use of key performance indicators graphs in corporate annual reports. Our study finds that the country-level and firm-level demands for
information provide an incentive, rather than a curb, for a selective display of key performance indicators, which is an important concern in corporate communication and reporting. The external pressure from the demand for information seems to encourage, rather than discourage, impression management. We suggest that annual report readers should use graphical information with caution as companies are likely to provide a self-serving, nonneutral, account of their performance in those contexts where the pressure to perform is higher
Oppressed by consumerism: The emancipatory role of household accounting
No full textThis paper investigates the role of household accounting in mitigating the oppressive force that is consumerism. Accounting helps to educate a community of families, allowing them to achieve a more restrained, just, and happier life. In this paper, the case study approach was used, and an in-depth analysis of an Italian community of families called the “Reports of Justice” was conducted. These families use accounting spreadsheets to view, analyze, and reallocate their expenditures toward more sustainable products. In this way, these families could observe an emancipatory change in progress and reflect on it. Additionally, by sharing reports and engaging in open discussions on accounting within local groups and other meetings, the whole community learns to achieve a more sober and just lifestyle, as opposed to a consumerist one. The paper shows how a community of families can learn to mitigate consumerism’s negative impacts through a process of problematization and praxis. The results are explained by relying on a Freirean-based theoretical approach. Accounting acts as a dialogic and mobilizing codification that codifies familial changes and helps achieve a transformational praxis. The paper is thus one of the first real-life examples of accounting’s contributions to responsible, sustainable consumption outside the corporate arena in a neglected micro-level context
Management accounting systems in venture capital-backed start-up companies
No full textManagement Accounting Systems (MAS) can help start-up companies to manage resource allocation and satisfy investors’ information needs. This study helps to investigate the main features of MAS adopted by Italian venture capital-backed startup companies. Also, the study aims to analyse how venture capitalists monitor their investment through management accounting. Thirty semi-structured interviews were carried out to gather information from a corporate and an investor perspective. Our results show that both start-up companies and investors consider MAS as useful to make conscious and target-oriented decisions. MAS are used by investors to monitor the investee’s performance and contribute in aligning goals’ time horizon. In addition, MAS help investors to develop a cooperative relationship with start-up companies and to provide business advices. This study contributes to the agency-theory debate by showing that MAS help not only to reduce information asymmetries but also to foster a dialogue and to benefit from investors’ human capital
Integration of CSR Criteria Into Executive Compensation Contracts: A Cross-Country Analysis
No full textThis study examines the relationship between the degree of external social and environmental regula-tory pressures and firms’ integration of corporate social responsibility (CSR) criteria into executive compensation contracts. Building on the notion that firms operate in settings in which external regu-latory pressures and internal corporate governance conditions interact, we investigate how internal corporate governance mechanisms moderate the relationship between external regulatory pressures and adoption of CSR criteria in executive compensation contracts. The analysis of a worldwide, lon-gitudinal sample of 2,328 firms listed in 37 countries during 2003 through 2015 reveals that the degree of regulatory pressure on firms to operate in socially and environmentally sound ways positively influ-ences their adoption of CSR criteria in executive compensation contracts (i.e., conformity effect). Regulatory pressures evoke heterogeneous responses among firms within a country though, depending on their interaction in the corporate governance bundle. Corporate governance mechanisms have moderating effects: a greater degree of board independence strengthens the conformity effect, whereas blockholder ownership weakens it. This study advances understanding of how the corporate governance bundle of external regulatory pressures and internal corporate governance mechanisms affects the adoption of a relatively recent, important corporate governance practice in the boardroom
Does graphical reporting improve risk disclosure? Evidence from European banks
No full textPurpose - The purpose of this paper is to examine the voluntary disclosure of risk-related issues, with a focus on credit risk, in graphical reporting for listed banks in the major European economies. It aims to understand if banks portray credit risk-related information in graphs accurately and whether these graphs provide incremental, rather than replicative, information. It also investigates whether credit risk-related graphs provide a fair representation of risk performance or a more favourable impression than is warranted. Design/methodology/approach - A graphical accuracy index was constructed. Incremental information was measured. A multi-level linear model investigated whether credit risk affects the quantity and quality of graphical credit risk disclosure. Findings - Banks used credit risk graphs to provide incremental information. They were also selective, with riskier banks less likely to use risk graphs. Banks were accurate in their graphical reporting, particularly those with high levels of credit risk. These findings can be explained within an impression management perspective taking human cognitive biases into account. Preparers of risk graphs seem to prefer selective omission over obfuscation via inaccuracy. This probably reflects the fact that individuals, and by implication annual report's users, generally judge the provision of inaccurate information more harshly than the omission of unfavourable information. Research limitations/implications - This study provides theoretical insights by pointing out the limitations of a purely economics-based agency theory approach to impression management. Practical implications - The study suggests annual reports' readers need to be careful about subtle forms of impression management, such as those exploiting their cognitive bias. Regulatory and professional bodies should develop guidelines to ensure neutral and comparable graphical disclosure. Originality/value - This study provides a substantive alternative to the predominant economic perspective on impression management in corporate reporting, by incorporating a psychological perspective taking human cognitive biases into account.</p
Impression management and retrospective sense-making in corporate annual reports: banks' graphical reporting during the global financial crisis
No full textThis study investigates two potentially complementary reporting scenarios in annual reports: reactive impression management and retrospective sense-making. It examines stock market performance graphs in European listed banks? annual reports before and during the global financial crisis. Our results indicate that banks reacted to the global financial crisis by omitting stock market performance graphs from the annual report and from its most prominent sections. On the other hand, banks reduced favorable distortions and favorable performance comparisons. No significant evidence of retrospective sense-making is found. Overall, the findings are consistent with impression management incorporating human cognitive biases, with companies preferring misrepresentation by omission over misrepresentation by commission. Under high public scrutiny, banks appear to seek to provide a more favorable view by concealing negative information rather than by favorable distortions or comparisons. The study contributes to the development of impression management theories. It uses a psychological interpretation that incorporates human cognitive biases, rather than adopting a purely economically based perspective
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