Signing the letter to shareholders: Does the Signatory’s role relate to impression management?

By | 2019-09-27T10:01:10+02:00 September 27th, 2019|

Bozzolan Saverio, Michelon Giovanna, Mattei Marco, Giornetti Andrea / Financial Reporting / 1-2019


In this paper, we syìtudy whether and how impression management in the letter to shareholders (LTS) is affected and related to the role of signatory (i.e. the person whose signature appears in the letter). Specifically, we argue and expect that impression management is associated with the underlying incentives to mislead outsiders that stem from the role of signatory. We find that impression management is more present when Insiders (executives or major shareholders) sign. We also find that the highest level of impression management is when the signatory holds an executive position and is not a major shareholder. Our evidence also suggests that the dichotomous classification between Insiders and Independent Directors is not sufficient to explain cross-sectional variation in impression management.

letter to shareholders, narrative disclosure, impression management, disclosure tone, annual report, executive vs. independent directors


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Do letters to shareholders inform or mislead? Insights from insider trading

By | 2019-09-27T09:13:24+02:00 September 27th, 2019|

Becalli Elena, Bozzolan Saverio, Laghi Enrico, Mattei Marco / Financial Reporting / 2-2018


Empirical studies consistently provide evidence that investors perceive quaitative disclosures as useful because they have significant effects on analysts’ forecast revisions and a firm’s share price. But these results leave unanswered the question of whether managers write qualitative disclosures to inform or mislead investors. Based on the signaling theory, we consider tw actions by the same manager: one (insider trading) is a costly signal whilst the other (qualitative disclosure) is the cheap signal. We then verify whether they are coherent. We investigate the content and the verbal tone of the Letter to Shareholders and the insider trading from its author before and after the letter’s date of release and find that the costly signal (the insider trading) is not coherent with the cheap signal (the disclosure). This finding indicates that managers do not use qualitative disclosures to offer incremental information but that they might use them to mislead investors.

signaling theory, impression management, insider trading, letter to shareholder, verbal tone


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Impression management and legitimacy strategies: The BP case

By | 2017-12-29T17:41:54+02:00 December 27th, 2017|

Michelon Giovanna/ Financial ReportingRiviste /Fascicolo: 4-2012


The aim of this paper is to study if and how impression management varies during different phases of the legitimation process, in particular during the legitimacy building and legitimacy repairing phases (Suchman, 1995). We aim at understanding whether and how the disclosure tone adopted by a company in the two different moments is diverse and thus functional to the intrinsic objective of the each phase. The empirical analysis focuses on the case of British Petroleum Plc. We investigated the impression management practices undertaken by the company both during the preparation of the rebranding operation, i.e. a situation in which the company is trying to build legitimacy; and during the happenings of two legitimacy crises, like the explosion of the refinery in Texas City and the oil spill in the Gulf of Mexico. The evidence appears in line with the theoretical prediction of legitimacy theory. Results show that while the company tends to privilege image enhancement techniques during the legitimacy-building phase, it uses more obfuscation techniques when managing a legitimacy-repairing process. Moreover, the analysis suggests that the company makes more extensive use of impression management techniques in the disclosures addressed to shareholders, investors and other market operators than in the disclosures addressed to the wide range of other stakeholders.

Keywords: Impression management, disclosure tone, legitimacy building, legitimacy crisis


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Graphical Reporting in Italian Annual Reports during the Financial Crisis: Impression Management or Incremental Information?

By | 2017-12-22T14:55:04+02:00 December 22nd, 2017|

Aresu Simone/ Financial ReportingRiviste / Fascicolo: 1-2015


This 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 continued 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.

Keywords: Financial crisis, financial key performance indicators graphs, impression management, incremental information


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