The purpose of this paper is to contribute to scholarly work on the role of sell-side financial analysts in corporate governance (CG). It examines the more recent work products pertaining specifically to CG that analysts based in the USA and UK have generated in the past two decades, namely, their CGCG reports. Specifically, this paper focusses on analysing how analyst CG reports constitute a comparative space in which the governance procedures of companies are evaluated and “best practices” are created.
This study involves a social constructivist textual analysis of 48 CG reports produced by analysts based in the USA and UK between 1998 and 2009.
Analyst CG reports textually construct a comparative space comprising four dimensions. First, the space is constructed for some carefully edited users to evaluate the governance of companies. Second, the construction of this space requires the selection of “building materials”, i.e., governance issues included in the space that render companies amenable to evaluation and comparison. Third, by linking the range of governance issues chosen to formal regulations, firms are rendered governable and regulatory requirements reinterpreted. Lastly, by using different types of inscriptions, such as narratives and tables, the space highlights “winners”, i.e., those companies which do better than others, and constructs their governance procedures as “best practices”.
This research provides a first step towards an in-depth understanding of analyst CG reports. The insights from this paper generate a range of areas for future research, including how these reports are produced and used.
This paper adds to the existing literature focussing on the role of analysts in CG. It extends previous studies by examining the more recent and debatable work products generated by analysts, namely, their CG reports, and suggests an extended CG role for them. Theoretically, analyst CG reports are conceptualised as “inscriptions” that construct “documentary reality”. The notion of “editing” is also drawn upon, to analyse a particular way in which documentary reality is constructed. Accordingly, this paper broadens the theoretical perspectives used in CG research.
This paper is based on my PhD thesis completed at the London School of Economics (LSE). The financial support from the Department of Accounting at the LSE is acknowledged. The author wishes to thank Peter Miller for his academic support throughout my doctoral study. The author is grateful to the editor, Lee Parker, and the two anonymous reviewers who have helped to improve the manuscript considerably. This paper has also benefited from discussions with Richard Laughlin and Colin Clubb.
Tan, Z.S. (2018), "Textual construction of comparative space: How analyst corporate governance reports redefine and create “best practice”", Accounting, Auditing & Accountability Journal, Vol. 31 No. 6, pp. 1794-1827. https://doi.org/10.1108/AAAJ-12-2014-1894Download as .RIS
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