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This paper aims to investigate the association between negative tone in annual report narratives and future performance in the UK context. Under the principle-based approach in the UK, managers tend to bias the tone of narrative reports upward, as the reporting regime is more flexible than the rule-based approach in the USA. Consequently, any negative disclosure not mandated by regulators conveys credible information about a firm’s prospects.

This paper uses a sample of UK FTSE all-share non-financial companies from 2010 to 2019. The authors use the textual-analysis approach based on Loughran and McDonald (2011)’s wordlist (LM) to measure the negative tone in UK annual reports.

The results show a significant negative association between negative tone and future performance. Moreover, our further analyses suggest that only the negativity in the executive section of the annual disclosures correlates significantly with future performance. In summary, this study suggests that negativity does matter under the principle-based approach and can be used as an indicator of future performance.

In contrast to the literature arguing that only positivity has the power to affect a firm’s outcomes under the principle-based approach, the authors provide new empirical evidence suggesting that negativity also matters within the UK context and can be used as an indicator for future performance. Also, to the best of the authors’ knowledge, this is the first study to identify which section of the annual report is more informative about a firm’s future performance.

This research aims to understand how companies communicate their understanding of water-related challenges and their responses to identify new pathways for addressing this challenge to further advance rising interest in water sustainability strategies of corporations.

Through a content analysis of corporate disclosures, this paper identifies the actions and challenges reported by 35 FTSE 100 companies. These are analyzed quantitatively and qualitatively to explore variations in the subject of disclosure and the narrative framing.

The findings identify a clear split across the types of water sustainability reporting according to the industrial sector and subject of disclosure, linking to different narratives used according to legitimacy pressures.

This paper finds that energy, materials and consumer staples sectors consistently outperform other sectors on the reporting of water issues and the scope which is covered. This has implications for the design of regulations and incentives to increase water sustainability management activities in large companies, which currently under-report.

This paper highlights the need for policy implementation to further integrate water-related topics into company reporting and identifies situations where the narrative disclosed may distort the underlying situation that is being communicated.

This paper explores the narratives used in company reporting to identify the challenges related to water sustainability and the actions taken in response. This can contribute to developing a pathway towards increased water sustainability (e.g. through new policy design).

This paper explores how the disclosure quality, measured by the abnormal tone of environmental and social report, may determine the environmental, social and corporate governance (ESG) performance of the firm. This study also investigates the impact of the moderator “board of directors” to explore the extent to which a well-balanced board of directors may affect this association within an impression management strategy.

This work uses a sample of 616 firm-year observations using a sample of French firms indexed on SBF120 index from 2010 to 2017. To test the developed hypotheses, the GLS regression is applied and to control for endogeneity issue and sample selection bias, the authors used, respectively, the two stage least square (2SLS) procedure and the Heckman model.

Findings suggest that a well-balanced board of directors moderates the relationship between the ESG performance and the disclosure quality. The positive effect of abnormal tone management on ESG is weakened by the presence of a good structure of the board, attenuating impression management initiatives.

The research provides evidence of the impact of corporate social responsibility (CSR) reporting quality, in particular disclosure tone management, on the level of ESG performance in the French context. As the board of directors may have a major impact on weakening impression management strategies in particular tone management practices, in order to improve CSR report quality, the authors recommend French companies to ensure a well-balanced board of directors.

This study helps investors to comprehensively evaluate the information disclosed on CSR reports. It unveils that a strong board composition induces better quality of CSR report and brings better ESG performance. Thus, the study results point to the importance of a well-balanced board of directors and the regulation of the narrative disclosure of CSR information.

The ability of generative artificial intelligence (AI) tools such as ChatGPT to produce convincing, human-like text has major implications for the future of corporate reporting, including sustainability reporting. As the importance of sustainability reporting continues to grow, this study aims to critically analyse the benefits and pitfalls of automated text generation and processing.

This study develops a conceptual framework to delineate the field, assess the implications and form the basis for the generation of research questions. This study uses Alvesson and Deetz’s critical framework, considering insight (a review of literature and practice in the field), critique (consideration of the influences on the production and use of non-financial information and the implications for assurers of such information) and transformative redefinition (considering the implications of generative AI for sustainability reporting and proposing a research agenda).

This study highlights the implications of generative AI for sustainability accounting, reporting, assurance and report usage, including the risk of AI facilitating greenwashing, and the importance of more research on the use of AI for these matters.

The paper highlights to stakeholders the implications of AI for all aspects of sustainability reporting, including accounting, reporting, assurance and usage of reports.

The implications of AI need to be understood in society, which this paper facilitates.

This study critically analyses the potential use of AI for sustainability reporting, construct a conceptual framework to delineate the field and develop a research agenda.

Companies documents such as annual reports incorporate narratives of repetitive rhetorical strategies as effective mechanisms adopted by companies' boardrooms to promote strategic change and strategic choices. These mechanisms can be viewed as persuasive appeals to facilitate boardrooms’ discourses. Despite the contribution of previous research through narrative analysis domains, conceptualization of narrative practices remains a relatively neglected area in the extant accounting literature.

The analytical framework is rooted in Aristotle's three pillars of rhetorical proofs: ethos (credibility/trustworthiness), pathos (emotion/identification through cultural domains) and logos (reason/rationale) in investigating narrative extracts regarding persuasive appeals adopted by Carillion's board through annual reports that facilitate discourse regarding Carillion’s strategic choices. Further, the authors emphasis on repetitive rhetorical slogan strategies embedded in the annual reports regarding Carillion's acquisitions strategy. We viewed acquisitions narratives as rhetorical communication artefacts and analyzed the repetitive rhetoric slogans in these corporate documents.

Findings of this study show how persuasive strategies and repetitive slogans trigger the discourses of Carillion's annual reports by drawing on perspectives from upper echelon theory, impression management and communication patterns. Findings reveal that Carillion’ board strategically use repetitive rhetoric slogans to shape optimistic corporate future performance which might be different from the feasible reality. Finally, the authors argue that corporate executives are striving to construct an alternative reality stem from their initial unrealistic aspiration to lead their sector of less controlled market share. Findings of this study have theoretical and managerial implications.

The key limitation of this study lies with the case study as the research methodology. Subjectivity remains inherent in interpreting the findings of this study. Future studies may adopt or adapt the authors’ analytical framework to examine other domains underpinning corporate reporting practices.

The findings of this study have practical implications for boardrooms and policymakers. Findings of this study have theoretical and managerial implications. The level of optimism has its impact on the mood of financial decision-makers, and when there is a high level of optimism, managers may consider making more investment decisions and therefore making many acquisitions. Managerial overconfidence has been widely documented in the literature. Overconfident managers systematically overestimate the probability of good outcomes (and correspondingly underestimate the probability of bad outcomes) resulting from their actions.

Managerial overconfidence refers to overestimation of managers' own abilities and outcomes relating to actions which are under their control. Executives believed that they have ultimate control over outcomes, which leads them to underestimate the probability of failure generally. According to self-attribution bias, many people tend to excessively credit their own skills for good results and overly credit external factors for bad outcomes.

The study explores the repetitive rhetorical slogan strategies embedded in the annual reports regarding Carillion's acquisitions strategy. Further, the study reveals how Carillion's board engaged through the early report with discourse and repetitive slogans to maintain their legitimacy. Findings reveal that Carillion’s board strategically uses repetitive rhetoric slogans to shape optimistic corporate future performance, which might be different from the feasible reality. Finally, the authors argue that corporate executives are striving to construct an alternative reality stem from their initial unrealistic aspiration to lead their sector of less controlled market share.

This study aims to focus on automated text analyses (ATAs) of sustainability and integrated reporting as a recent approach in empirical–quantitative research.

Based on legitimacy theory, the author conducts a structured literature review and includes 38 quantitative peer-reviewed empirical (archival) studies on specific determinants and consequences of sustainability and integrated reporting. The paper makes a clear distinction between analyses of reports due to readability, tone, similarity and specific topics. In line with prior studies, it is assumed that more readable reports with less tone and similarity relate to increased reporting quality.

In line with legitimacy theory, there are empirical indications that specific corporate governance variables, other firm characteristics and regulatory issues have a main impact on the quality of sustainability and integrated reporting. Furthermore, increased reporting quality leads to positive market reactions in line with the business case argument.

The author deduces useful recommendations for future research to motivate researchers to include ATA of sustainability and integrated reports. Among others, future research should recognize sustainable and behavioral corporate governance determinants and analyze other stakeholders’ reactions.

As both stakeholders’ demands on sustainability and integrated reporting have increased since the financial crisis of 2008–2009, firms should increase the quality of reporting processes.

This analysis makes major contributions to prior research by including both sustainability and integrated reporting, based on ATA. ATAs play a prominent role in recent empirical research to evaluate possible drivers and consequences of sustainability and integrated reports. ATA may contribute to increased validity of empirical–quantitative research in comparison to classical manual content analyses, especially due to future CSR washing analyses.

This study aims to scrutinize the relationship between the perception of big data (BD) features and the primary outcomes of financial accounting. Likewise, it explores whether financial accounting practices moderate the relationship between BD features and firm sustainability.

The study used a questionnaire survey based on the Likert scale for two distinct groups of participants: academic scholars and industry practitioners operating in the BD era within the energy sector.

The results reveal significant positive associations between BD features and firm performance, reporting quality, earnings determinants, fair value measurements, risk management, firm value, the efficiency of the decision-making process, narrative disclosure and firm sustainability. Besides, the path analysis indicates an indirect impact of BD on firm sustainability via financial accounting practices. The results suggest that energy firms should consider incorporating BD analysis into their financial accounting processes to improve their sustainability performance and create long-term value for their stakeholders.

The findings are particularly interesting to academics in accounting and business to improve the accounting curriculums to fit the technological revolution, especially in the field of BD analytics. Practitioners within energy industries must also refine their skills and knowledge to meet the challenges of BD in the foreseeable future. The results provide important implications for policy setters to revise current financial accounting standards to cope with technological innovation.

The study makes a valuable contribution by critically examining the impact of BD on various financial accounting practices neglected in prior research. It highlights the transformative power of BD in the domain of financial accounting and provides insights into its potential implications for energy firms.

The International Integrated Reporting Council (IIRC) has promulgated the production of integrated reports to enhance transparency and encourage improved stakeholder relationships. The purpose of this study/paper is to explore how managers prioritize the needs of stakeholders and to what extent integrated reporting is associated with those stakeholder relationships.

The paper uses a case study/interpretative approach to compare the underlying motivation for the preparation of an integrated report across three case study sites from three different industry groups. Face-to-face and telephone semi-structured interviews, email correspondence and a review of the integrated reports form the basis for the data collection and analysis.

The case studies investigated for this project provide evidence that integrated reporting did motivate further stakeholder engagement to increase the organizations’ legitimacy and transparency. Overall, the authors found that the three case study organizations used the production of an integrated report to cement their place as a “leader” in their respective industry group. Moreover, managers regarded the current statutory accounts as inadequate in communicating and engaging with a broad range of stakeholders. There were elements of enhancing, defending and repairing legitimacy and managers tended to equate legitimacy with transparency.

Three case study sites were selected on the basis of producing exemplary integrated reports, and senior executives provided their views on stakeholder engagement. For the scope of this study, the stakeholders themselves were not involved in this investigation which can be viewed as a limitation.

The international IIRC Framework is built upon the notion that stakeholders are integral to assisting the organization in creating value. The outcomes of this investigation suggest that for preparers, the incumbent organization is reliant on the leadership of senior managers (inclusive of the chief executive officer) and directors to actually instigate the process. In Australia and New Zealand, given that integrated reporting is not mandatory, regulators have no influence over the scope, content and veracity of integrated reports. It seems likely that further stakeholder engagement will become intrinsic to the business model of organizations as a means to quell any notion that it is engaging in greenwashing.

The value of this paper is to contrast how three quite distinct organizations are using their integrated reports to communicate their approach to stakeholder engagement. Stakeholder salience dimensions are used to explore the importance attributed by senior managers.

This study examines how accounting tools and techniques are used to create and support membership and reporting boundaries for a multi-entity sustainability scheme. It also considers whether boundary setting for this initiative helps to connect corporate activity with planetary boundaries and the SDGs.

A case study of a national agrifood sustainability scheme, analysing extensive documentary data and multi-entity sustainability reports. The concept of partial organising is used to frame the analysis.

Accounting, in the form of planning, verification, target setting, annual review and reporting, can be used to create a membership and a reporting boundary. Accounting tools and techniques support the scheme's standard-setting and monitoring elements. The study demonstrates that the scheme offers innovation in how sustainability reporting is managed. However, it does not currently provide a cumulative assessment of the effect of the sector's activity on ecological carrying capacity or connect this activity to global sustainability indicators.

Future research can build on this study's insights to further develop our understanding of multi-entity sustainability reporting and accounting's role in organising for sustainability. The authors identify several research avenues including: boundary setting in ecologically significant sectors, integrating global sustainability indicators at sectoral and organisational levels, sustainability controls in multi-entity settings and the potential of multi-entity reporting to provide substantive disclosure.

This paper provides insight into accounting's role in boundary setting for a multi-entity sustainability initiative. It adds to our understanding of the potential of a multi-entity reporting boundary to support connected measurement between corporate activity and global sustainability indicators. It builds on work on partial organising and provides insight into how accounting can support this form of organising for sustainability.

New Zealand (NZ) has no reporting standard or guidance for management commentary (MC) that accompanies financial reports. This is unusual, considering MC is provided by many entities and valued by users. Further, the guidance on MC provided by the International Accounting Standards Board (IASB) in their Management Commentary Practice Statement 1 (MCPS1), which was issued in 2010, is currently under review. Thus, the purpose of this paper is to examine the views of NZ’s financial reporting stakeholders, particularly users, preparers and auditors of financial reports for insights regarding the usefulness of MC.

To gain insights into the views of NZ’s financial reporting stakeholders on MC, this paper surveyed users, preparers and auditors of financial statements. This paper includes an analysis of their views on the objectives, content and principles that should underlie MC in financial reporting, based on the IASB’s MCPS1 with consideration of recent work by the IASB on the revision of MCPS1. In addition, the analysis provides insights as to whether the reporting of MC should be made mandatory, and whether assuring MC would increase its usefulness.

This study found that auditors generally view MC as less useful and more in need of assurance than do preparers and users. Respondents’ ratings indicate that the most important objective for MC is “to enable the assessment of the quality of management’s stewardship”. “Assessing the entity’s future prospects”, and “assessing future cash flows” are also highly rated objectives. The most important principle in preparing MC is identified as “focus on the most important and relevant information”, while the most important content element identified is “the entity's financial performance and position, and cash flows”.

This paper highlights the views of various stakeholders regarding MC reporting, particularly preparers and auditors whose views have not been noted previously in the literature. Also, this study should be of interest to both international and national financial reporting standard setters and regulators. It is particularly timely in view of the current IASB work towards revision and updating of MCPS1, as it provides current insights into what users, preparers and auditors perceive as the most important considerations for MC. This study also has implications for the XRB in NZ, where there is no prior research on stakeholders’ views on MC.