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