Discretionary Disclosure Strategies in Corporate Narratives: Incremental Information or Impression Management?  

Oleh:

Merkl-Davies, Doris M. ; Brennan, Niamh M.

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: Journal of Accounting Literature vol. 2007 no. 26 (2007), page 116-194.
Topik: Public Sector Accounting; PSA; Discretionary Disclosure Strategies; Opportunistic Behavior; Narrative Disclosure; Corporate Documents; Financial Statements; Annual Reports; Shareholders; Stakeholders
Fulltext: JAL 07 26 116.pdf (5.94MB)

Isi artikel

The purpose of this paper is to review and synthesize the literature on discretionary narrative disclosures. We explore why, how, and whether preparers of corporate narrative reports use discretionary disclosures in corporate narrative documents and why, how, and whether users react thereto. To facilitate the review, we provide three taxonomies based on: the motivation for discretionary narrative disclosures (opportunistic behavior, i.e. impression management, versus provision of useful incremental information); the research perspective (preparer versus user); and seven discretionary disclosure strategies. We also examine the whole range of theoretical frameworks utilized by prior research, and we put forward some suggestions for future research. The scope of the paper is discretionary narrative disclosure strategies in the narrative sections (both verbal and numerical information) of corporate documents (excluding the financial statements). The most commonly researched corporate documents are annual reports that Neu et al. [1998] state are effective vehicles for impression management due to the proximity of the narrative sections to the auditor's report, which may add credibility to the disclosures. We also examine prior research on other vehicles for narrative disclosure strategies including press releases, managerial forecasts, websites, and conference calls. However, the paper does not cover impression management studies of graphs and pictures in corporate documents. Although laborious [Abrahamson and Amir, 1996], nonetheless it is important to engage in impression management research to understand how managers communicate with shareholders and stakeholders, possibly to manage their perceptions. The remainder of the paper is organized as follows. Section 2 discusses the two competing schools of thought. As part of that discussion, we consider the importance and consequences of impression management. Section 3 examines research from a preparer perspective, including the seven discretionary disclosure strategies implemented by managers in corporate narratives. Section 4 presents research from the user perspective. In both preparer and user sections, we discuss theoretical frameworks in prior research and prior empirical research findings. Limitations of prior research and suggestions for future research are set out in Section 5. Section 6 draws together the evidence on whether discretionary narrative disclosure strategies constitute impression management or value-relevant information.

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