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1 – 10 of 54Beibei Yan, Walter Aerts and James Thewissen
This paper aims to investigate the informativeness of rhetorical impression management patterns of CEO letters and examines whether these rhetorical features affect financial…
Abstract
Purpose
This paper aims to investigate the informativeness of rhetorical impression management patterns of CEO letters and examines whether these rhetorical features affect financial analysts’ forecasting behaviour.
Design/methodology/approach
The authors use textual analysis on a sample of 526 CEO letters of US firms and apply factor analysis on individual linguistic style measures to identify co-occurrence patterns of style features.
Findings
The authors identify three holistic style patterns (assertive acclaiming, cautious plausibility-based framing and logic-based rationalizing) and find that assertive rhetorical feature in CEO letters is negatively related with the dispersion of financial analysts’ earnings forecasts and positively associated with earnings forecast accuracy. CEOs’ use of a rationalizing rhetorical pattern tends to decrease the dispersion of financial analysts’ earnings, whereas a cautious plausibility-based rhetorical position is only marginally instrumental in getting more accurate earnings predictions.
Practical implications
Whilst impression management communication is often theorized as manipulative and void of real information content, the findings suggest that impression management serves both self-presentation and information-sharing purposes.
Originality/value
This paper elaborates on the co-occurrence of style characteristics in management communication and is a first attempt to validate the external ramifications of holistic style profiles of corporate narratives by focusing on an economic target audience.
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Using composite style measures of the letter to shareholders, the purpose of this paper is to elaborate dominant rhetorical profiles and qualify them from an impression management…
Abstract
Purpose
Using composite style measures of the letter to shareholders, the purpose of this paper is to elaborate dominant rhetorical profiles and qualify them from an impression management (IM) perspective. In addition, the paper examines how institutional differences affect rhetorical profiles by comparing intensity and contingencies of rhetorical profiles of UK and US companies.
Design/methodology/approach
The authors use automated text analysis to capture linguistic style characteristics of a panel of UK and US companies and employ factor analysis to determine rhetorical profiles. Next, the authors investigate company-level and country-level determinants of a company’s rhetorical stance.
Findings
The authors document three prominent rhetorical profiles: an emphatic acclaiming stance, a cautious plausibility-based framing position, and a logic-based rationalizing orientation. The profiles represent distinct self-presentational logics and have different readability effects. Rhetorical IM is stronger in US companies, but higher expected scrutiny in the US institutional environment affects sensitivity of rhetorical postures to message credibility and litigation risk, while marginally increasing the less litigation-sensitive defensive framing style in US letters.
Originality/value
The authors develop replicable archival-based measures of prominent rhetorical IM traits of the shareholder letter, based on composite style features. The authors argue that they are qualitatively different from content-based IM proxies. The authors investigate their institutional and organizational relevance by examining how company features and country-level differences affect incentives and constraints for style-based rhetorical IM.
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This paper aims to analyse the nature and extent of convergence within the literature of the narrative turn in narrative accounting research.
Abstract
Purpose
This paper aims to analyse the nature and extent of convergence within the literature of the narrative turn in narrative accounting research.
Design/methodology/approach
The paper offers an actor–network–theoretic perspective drawing on Latour’s theory of citation and Shwed and Bearman’s development of that theory to analyse patterns of convergence.
Findings
The paper finds that across the exemplars of narrative turn research examined, there is only a limited level of epistemic engagement so that exemplars achieve their status without undergoing trials of strength.
Research limitations/implications
The paper argues that the resources of the relevant academic community are spread so thinly that each seam – each research question, methodology or method and research context – is mined by no more than a small handful of researchers unable to generate a meaningful volume of contestation. Steps are suggested to better focus research activity.
Originality/value
The use of Latour’s theory of citation to analyse patterns of convergence in accounting research is innovative. The paper proposes a substantial change in the community’s approach to narrative turn research on accounting narratives.
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Walter Aerts and Tom Van Caneghem
This paper aims to study conformity tendencies in selling, general and administrative (SG&A) expenses reporting of US firms through an institutional lens.
Abstract
Purpose
This paper aims to study conformity tendencies in selling, general and administrative (SG&A) expenses reporting of US firms through an institutional lens.
Design/methodology/approach
The paper examines intra‐industry conformity in SG&A reporting over a ten‐year period among a sample of US firms. It measures conformity by comparing a firm's SG&A profile (reported SG&A relative to sales) against a reference group of industry model firms.
Findings
Results suggest that a firm's conformity to large and successful firms' SG&A profiles is determined by the tendency of other industry members to imitate those reference models. Large audit firms (i.e. the BigN) are shown to provide an effective diffusion channel of shared industry‐based reporting templates. Different modes of trait imitation in SG&A reporting seem to coexist as long as the industry model firms are defined in terms of size and/or profitability.
Research limitations/implications
The paper's results may be of interest to capital market standard‐setters and regulators by showing how regulative ambiguity created by the lack of guidance, feeds social processes that tend to fill the guidance gap.
Practical implications
The paper's results show that intra‐industry benchmarking of SG&A reporting plays a significant role in the USA and that international auditor networks are important in establishing and promoting industry‐based reporting formats.
Originality/value
The paper shows that the behavior of firms at the industry level can be significant predictors of financial reporting practices at firm level and illustrate specific, socially based mechanisms through which the institutional environment affects financial reporting decisions.
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Denis Cormier, Marie‐Josée Ledoux, Michel Magnan and Walter Aerts
The purpose of this paper is to investigate the impact of governance on information asymmetry between managers and investors. Hence, the paper seeks to extend prior voluntary…
Abstract
Purpose
The purpose of this paper is to investigate the impact of governance on information asymmetry between managers and investors. Hence, the paper seeks to extend prior voluntary disclosure research.
Design/methodology/approach
The paper investigates how a firm's governance maps into the level of information asymmetry between managers and investors. Governance encompasses two complementary dimensions: formal monitoring attributes and voluntary disclosure about board processes. Information asymmetry is measured by either share price volatility or Tobin's Q.
Findings
The results show that some formal monitoring attributes (board and audit committee size) as well as the extent of voluntary governance disclosure reduce information asymmetry. This suggests that governance disclosure may complement a firm's governance monitoring attributes, especially in a country such as Canada where investors have good legal protection. It appears also that firms take into account ultimate costs and benefits to shareholders when determining their governance disclosure.
Originality/value
To the best of the authors' knowledge, this study is the first to investigate the impact of voluntary governance disclosure on information asymmetry.
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Raf Orens, Walter Aerts and Nadine Lybaert
This paper seeks to examine the association between a firm's extent and precision of customer value disclosure and its implied cost of equity capital. In addition, it aims to…
Abstract
Purpose
This paper seeks to examine the association between a firm's extent and precision of customer value disclosure and its implied cost of equity capital. In addition, it aims to investigate whether industry competition intensity attenuates this association.
Design/methodology/approach
The content of corporate websites from four continental European countries is analysed on the presence and precision of customer value information and empirically test whether content and precision are associated with the firm's implied cost of equity capital measurement.
Findings
The results show a negative association between cross‐sectional differences in the extent of customer value disclosure and cross‐sectional differences in a firm's cost of equity capital. In addition, the precision of the customer value information disclosed affects this association. It is observed that a negative relationship between quantitative (or hard) customer value disclosure and a firm's cost of equity capital, but not for qualitative (or soft) customer value disclosure. As expected, industry competition intensity attenuates the association between quantitative customer value disclosures and a firm's cost of equity capital.
Research limitations/implications
The paper considers web placement of customer value disclosure although a firm might disclose such information through other information channels as well.
Practical implications
A firm tends to benefit economically from more precise customer value disclosure.
Originality/value
The paper extends existing evidence by considering the capital market implications of disclosing customer value information. In addition, it examines whether industry competition affects the association between customer value disclosure and the firm's cost of equity capital.
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Raf Orens, Walter Aerts and Nadine Lybaert
The purpose of this paper is to examine empirically the impact of web‐based intellectual capital (IC) reporting on firm's value and its cost of finance.
Abstract
Purpose
The purpose of this paper is to examine empirically the impact of web‐based intellectual capital (IC) reporting on firm's value and its cost of finance.
Design/methodology/approach
A content‐analysis of corporate web sites is conducted from four continental European countries (Belgium, France, Germany and The Netherlands) on the presence of IC information. Simultaneous regression modelling is used to control for endogeneity within a firm's disclosure strategy.
Findings
The data show that cross‐sectional differences in the extent of IC disclosure are positively associated with firm value. Greater IC disclosure in continental Europe is associated with lower information asymmetry, lower implied cost of equity capital and lower rate of interest paid.
Research limitations/implications
The study is restricted to an analysis of firm's benefits of increased web‐based disclosure without considering related costs.
Practical implications
The results of the study show that firms tend to benefit economically from better IC disclosure.
Originality/value
Existing evidence is extended by considering the capital market implications of IC related disclosure and web‐based related disclosure.
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Tom Van Caneghem and Walter Aerts
The purpose of this paper is to study the impact of intra‐industry conformity tendencies on dividend policy among a large sample of US firms.
Abstract
Purpose
The purpose of this paper is to study the impact of intra‐industry conformity tendencies on dividend policy among a large sample of US firms.
Design/methodology/approach
The paper explores mimetic influences on dividend policy. Consistent with prior institutional research, the paper measures mimetic pressures as institutional prevalence or the pervasiveness of a feature of dividend policy within a firm's relevant environment.
Findings
The results reveal a significantly positive relationship between the lagged density of firms in the industry that pay a dividend and the probability of a focal firm paying a dividend. Moreover, for firms paying a dividend, results indicate that higher similarity in dividend payout among firms in the same industry induces more conformity between a focal firm and average industry practice. Overall, results are consistent with imitation in dividend policy.
Research limitations/implications
The results support the view that future research on dividend policy should value social and behavioral factors more explicitly in order to arrive at a more overall and consistent explanation of firms' dividend policy. Moreover, the results also illustrate the relevance of alternative theories in explaining dividend policy.
Practical implications
The results show that intra‐industry benchmarking of dividend policy plays a significant role in the USA.
Originality/value
This study documents the relevance of social imitation mechanisms behind dividend payout behavior and therefore adds to the current knowledge of the impact of behavioral processes on dividend policy.
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Abstract
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