Impression management: developing and
illustrating a scheme of analysis for narrative
disclosures – a methodological note
Niamh Brennan, Encarna Guillamon-Saorin and Aileen Pierce
Accountancy Subject Area
UCD Business Schools
Corresponding author: firstname.lastname@example.org
WP 08 / 06
Electronic copy available at: http://ssrn.com/abstract=1284904
Impression management: developing and illustrating a scheme of analysis for
narrative disclosures – a methodological note
Niamh M. Brennan
, Encarna Guillamon-Saorin* and Aileen Pierce
*University of Carlos III, Madrid
University College Dublin
Address for correspondence:
Prof. Niamh Brennan, Quinn School of Business, University College Dublin, Belfield, Dublin 4. Tel. +353-1
716 4704; Fax +353-1-716 4767; e-mail Niamh.Brennan@ucd.ie
This research was partially supported by the Accounting Harmonisation and Standardisation in Europe:
Enforcement, Comparability and Capital Market Effects research project (Contract No. HPRN-CT-2000-
00062) carried out by the HARMONIA network and funded by the European Commission Research
Electronic copy available at: http://ssrn.com/abstract=1284904
Impression management: developing and illustrating a scheme of analysis for
narrative disclosures – a methodological note
Purpose – This paper develops a holistic measure for impression management and for
bias introduced into corporate narratives as a result of impression management.
Design/methodology/approach – Prior research on the seven impression
management methods in the literature is summarised. Four of the less-researched
methods are described in detail, and are illustrated with examples from UK Annual
Results’ Press Releases (ARPRs). A method of computing a holistic composite
impression management score based on these four impression management methods
is developed, based on both quantitative and qualitative data in corporate narrative
disclosures. A bias score is devised to capture the extent to which impression
management introduces bias into corporate narratives. An example of the application
of the composite impression management score and bias score methodology is
Findings – While not amounting to systematic evidence, the 21 illustrative examples
suggest that impression management is pervasive in corporate financial
communications using multiple impression management methods, such that positive
information is exaggerated, while negative information is either ignored or is
Originality/value – Four impression management methods are described in detail,
illustrated by 21 examples. These four methods are examined together. New
impression management methods are studied in this paper for the first time. This
paper extends prior impression management measures in two ways. First, a composite
impression management score based on four impression management techniques is
articulated. Second, the composite impression management score methodology is
extended to capture a measure for bias. This is the first time outside the US that
narrative disclosures in press releases have been studied.
Keywords Impression management, press releases, content analysis
Paper type Methodology paper
What is impression management?
Impression management has its origins in the psychology literature (Schlenker, 1980;
Riess et al., 1981; Schneider, 1981). The term “impression management” refers to the
process by which individuals attempt to control the impressions of others (Leary and
Kowalski, 1990, p. 34). In the context of corporate reporting, impression management
occurs when management selects information to display and presents that information
in a manner that distorts readers’ perceptions of corporate achievements (Neu, 1991;
Neu et al., 1998). Impression management predominantly occurs in less regulated
narrative disclosures which focus on interpreting financial outcomes.
Exercise of discretion and managerial motives for impression management
Most accounting studies of impression management are based explicitly or implicitly
on the assumption that management is motivated by a desire to present a self-serving
view of corporate performance (Neu, 1991; Neu et al., 1998). This manifests itself in
a number of ways. Firstly, management is hypothesised to want to hide poor firm
performance. (Adelberg, 1979) suggested that managers might be expected to
obfuscate their failures and underscore their successes. The obfuscation hypothesis,
first tested by Courtis (1995), posits that management is not neutral in how it presents
information, preferring to communicate in a manner that hides bad news. For
example, text reporting negative organisational outcomes is expected to use language
and syntactical features that make the text more difficult to read. Management may
use rhetorical devices to conceal negative organisational outcomes. A variant on this
relates to attributional behaviour by management. In narrative explanations of
performance, it is assumed management will act in a self-interested manner and
attribute poor performance to external factors or to other factors outside its control
(e.g., predecessor CEOs), and attribute good performance to internal factors (i.e., their
own good management). Management is expected to manipulate themes by disclosing
more positive and less negative information in the form of accounting narratives. A
variation on this is selection by management of quantitative amounts such as earnings
numbers for disclosure that display the firm in the best possible manner. Visual and
presentation techniques are also expected to underplay negative performance and
exaggerate positive performance (see, for example, Beattie and Jones, 2002; Courtis,
2004a). Finally for the purpose of showing management in the best possible light,
accounting narratives are expected to contain performance comparators and
benchmarks that display the company most favourably.
Objectives and contribution of the paper
Beattie et al. (2004, p. 213) observe “…extant approaches to the analysis of
accounting narratives…are essentially one dimensional, whereas disclosure is a
complex multi-faceted concept”. The purpose of this paper is to develop a holistic
measure of impression management for both qualitative and quantitative disclosures.
This paper has four objectives: (1) The impression management literature is reviewed
from a methodological perspective, summarising the seven methods examined in prior
research to measure impression management; (2) Four of the less-researched methods
of measuring impression management are described in depth and are illustrated using
examples from annual results press releases (ARPRs) of UK companies; (3) A holistic
method of measuring impression management is developed in the form of composite
scores based on the four impression management techniques studied in the paper. A
composite impression management score for both qualitative and quantitative
disclosures is articulated. Finally, based on the composite impression management
score methodology, (4) a method for measuring the bias introduced into narrative
disclosures by impression management is developed.
The paper restricts itself to narrative disclosures. This study focuses on press releases
announcing annual results. These press releases contain information on company
performance, thereby facilitating an analysis of the influence of performance on
impression management. Press releases are voluntary disclosures, released by
companies to the market (i.e., to the media, shareholders, wire services, etc.) even
though not required by laws or regulations. The content of press releases is largely
(but not completely) unregulated, and this makes it easier for managers to manipulate
the information disclosed therein, and a potential vehicle for impression management.
Their coverage in national newspapers, television and radio business reports by an
often uncritical financial media, provides them with a wider audience beyond users
who study annual reports (see Maat, 2007 for a more detailed discussion of these
issues). Thus, their influence on user perceptions is arguably far in excess of those of
other accounting disclosure vehicles.
The paper contributes to the literature in six ways. (1) In-depth insights into four
content analysis techniques are provided, illustrating those techniques with 21
examples from UK ARPRs. These are among the less-researched impression
management techniques. (2) Most prior research considers a single, or at most two,
impression management techniques in a given context. This study applies four
techniques: thematic form-orientated analysis, selectivity (Choice/selection of
performance number), visual/presentation effects (emphasis) and performance
comparisons (use of benchmarks). (3) New impression management techniques are
studied for the first time in accounting. Visual/presentation effects (emphasis), is
articulated in three different ways (location/positioning, repetition, reinforcement). (4)
A holistic composite impression management score for impression management is
articulated, based on four (out of a maximum of seven) impression management
methods. (5) A bias score is computed to measure the extent to which impression
management introduces bias into financial reporting. (6) Nearly all of the existing
literature (mainly UK, US and Australia) is based on narratives in corporate reports
(commonly the president’s letter/chairman’s statement). Basing this study on
narratives in press releases represents an opportunity to extend research findings to a
new communications’ format. While there have been a small number of studies of
disclosures in press releases in the US (e.g., Lougee and Marquardt, 2004; Bowen et
al., 2005; Johnson and Schwartz, 2005; Davis et al., 2007; Henry, 2006), this is the
first study of disclosures in press releases in another country. Press releases are
important disclosure vehicles given their subsequent influence on, and even inclusion
in, media outlets resulting in wider dissemination of their content compared with the
content of annual reports.
Organisation of the paper
Prior research on impression management focusing on methodological aspects of that
research is reviewed in Section 2. Section 3 sets out in detail the methods applied in
this study. These are illustrated using examples from various press releases in Section
4. The paper concludes in Section 5 with a discussion of the implications of the
findings, limitations of the research, and the opportunities for future research.
2. Prior impression management research
This section of the paper commences by considering the wide variety of disclosure
vehicles which contain accounting narratives and which provide management with
opportunities to manage readers’ impressions. Prior impression management research
is then reviewed from the perspective of the methods used to analyse impression
management tactics and practices.
Vehicles for impression management
The focus of prior research on accounting narratives has been Presidents’ Letters,
Chairmen’s Reports, Management Discussion & Analyses, Operating and Financial
Reviews, Auditors’ Reports, Financial Statement Footnotes, Interim reports,
Prospectuses, Press Releases and Environmental Disclosures (see Tables 2 to 5 in
Merkl-Davies and Brennan, 2007).
Methods of content analysis in prior impression management research
Table 1 summarises the content analysis methods applied in analysing accounting
narratives from an impression management point of view in prior research. Seven
approaches have been identified, including syntactic manipulation, rhetorical
manipulation, attribution of organisational outcomes (meaning-orientated studies),
thematic manipulation (form-orientated studies), selectivity (choice/selection of
performance number), visual/presentation effects (emphasis), and performance
comparisons. The latter four methods are applied in this paper.
Table 1: Impression management in corporate documents: Content analysis methods in prior research
(1) Syntactical manipulation (method of
• Adelberg (1979) (Cloze)
• Parker (1982) (Fog)
• Lewis et al. (1986)
(Fog, Flesch, Kwolek,
Dale-Chall, Lix, Fry)
• Courtis (1986) (Fog, Flesch)
• Jones (1988) (Flesch)
• Baker and Kare (1992) (Flesch)
• Stevens et al., (1992)
• Smith and Taffler (1992a; 1992b)
• Subramanian et al. (1993) (Fog, Flesch)
• Courtis (1995) (Fog, Flesch, Lix)
• Jones (1997)
• Courtis (1998) (Flesch)
• Sydserff and Weetman (1999) (Flesch,
• Clatworthy and Jones (2001) (Flesch)
• Sydserff and Weetman (2002)
Transitivity index, Diction)
• Rutherford (2003) (Flesch)
• Courtis (2004b) (Flesch)
• Li (2008)
• Merkl-Davies (2007)
(2) Rhetorical manipulation (method of analysis applied)
• Thomas (1997) (Passive constructions, Sentence openers, Relationship between
first and last paragraph, Euphemisms)
• Jameson (2000) (Multiple voices, Embedded genres, Contrasting focal points)
• Sydserff and Weetman (2002)
(Transitivity index, DICTION)
• Yuthas et al. (2002) (Comprehensibility, Truth, Legitimacy, Sincerity, DICTION)
(3) Attribution of organisational outcomes - Meaning-orientated thematic studies
(method of analysis applied)
• Ingram and Frazier (1980)
• Frazier et al. (1984) (WORDS)
• Staw et al. (1983) (Analysis of performance explanations)
• Aerts (1994) (Analysis of performance explanations)
• Baginski et al. (2000) (Manual coding of internal / external causes)
• Hooghiemstra (2001) (Performance explanations, Technical language)
• Aerts (2001) (Analysis of performance explanations)
• Clatworthy and Jones (2003)
• Lee et al. (2004) (Attributional statements)
• Baginski et al. (2004) (Manual coding of internal / external causes)
• Aerts (2005) (Analysis of performance explanations)
• Ogden and Clarke (2005)
• Barton and Mercer (2005) (Analysis of managerial attributions)
(4) Thematic manipulation - Form-orientated studies (method of
• Tennyson et al. (1990) (WORDS)
• Abrahamson and Park (1994) (Negative keywords)
• Smith and Taffler (1995) (User perception)
• Abrahamson and Amir (1996) (Negative keywords)
• Smith and Taffler (2000) (Positive/negative keywords)
• Lang and Lundholm (2000) (Type of statements (performance,
management spin, forward looking, other), Tone of disclosures
• Clatworthy and Jones (2003)
(Positive/negative keywords and
• Rutherford (2005) (Frequencies of 90 keywords)
• Davis et al. (2007) (Optimistic/Pessimistic language use, DICTION)
Henry (2006) (Tone (Frequency positive/negative keywords –
DICTION)), Length of press release, Textual complexity,
• Clatworthy and Jones (2006) (Length of accounting narratives,
Number passive sentences, Number key financial indicators,
Number personal references, Number quantitative references,
Number future references)
• Matsumoto et al. (2006)(Number words positive/negative tone)
Selectivity (Choice/selection of performance number)
• Lougee and Marquardt (2004) (Pro forma earnings disclosures)
Johnson and Schwartz (2005) (Pro forma earnings disclosures
(6) Visual/presentation effects (emphasis)
• Staw et al. (1983) (Ordering of information)
• Courtis (1996) (Repetition)
• Baird and Zelin (2000)(Ordering of information)
• So and Smith (2002) (Use of colour)
• Courtis (2004a) (Use of colour)
• Bowen et al. (2005) (Emphasis/positioning of pro forma earnings)
• Kelton (2006) (Design characteristics of the accounting information)
• Elliot (2006) (Emphasis/presentation of GAAP and pro forma
(7) Performance comparisons
• Lewellen et al. (1996) (Stock return performance comparisons)
• Schrand and Walther (2000) (Prior period earnings benchmarks)
• Cassar (2001) (Disclosure of share performance graphs)
• Short and Palmer (2003) (Performance referents)
• Krische (2005)(Prior period benchmark comparisons of earnings)
Sydserff and Weetman (2002) is difficult to classify as it uses three methods: one reading ease manipulation and two rhetorical manipulation.
Ingram and Frazier (1980) is a corporate social reporting study.
Clatworthy and Jones (2003) test both for the association between positive/negative organizational outcomes and increasing/declining performance and the attribution of positive/negative organizational outcomes
to internal/external factors and increasing/declining/performance.
Odgen and Clarke (2005) examine impression management in the context of legitimacy. They use attribution of organisational outcomes in the form of entitlements and excuses as part of a whole array of
impression management techniques aimed at gaining legitimacy.
Source: Reproduced (with amendments) from Table 2 in Merkl-Davies and Brennan (2007)
Syntactical manipulation in accounting narratives
The largest group of studies comprises an analysis of the language used in accounting
disclosures. Much of this research is motivated by the assumption that managers use
language to obfuscate corporate performance, especially negative performance. The
hypothesis is that negative performance is reported using language that is more
difficult to read.
These syntactic studies apply various methods of measuring readability, focusing on
analysing the readability of the text using features such as sentence length or number
of syllables. Readability is assessed by a readability formula which counts language
variables in a text in order to provide a measure of probable reading difficulty for
readers. As shown in Table 1, ten different readability measures have been applied in
prior accounting research: Fog, Flesch, Kwolek, Dale-Chall, Lix, Fry, Cloze, Texture
index, Transitivity index and Diction. Most studies investigating impression
management through readability look at the relationship between readability and
company performance (Adelberg, 1979; Courtis, 1986; Jones, 1988; Baker and Kare,
1992; Kohut and Segars, 1992; Smith and Taffler, 1992a; Subramanian et al., 1993;
Courtis, 1995; 1998; Clatworthy and Jones, 2001).
Readability methodology has been criticized because it originated in the psychology
literature where it is used to assess children’s writing. Various authors have
acknowledged the limitations of readability formulae and their application to
accounting narratives, giving rise to issues of validity (Jones and Shoemaker, 1994,
pp. 164-5; Courtis, 1998).
Rhetorical manipulation in accounting narratives
This stream of impression management research is also based on the obfuscation
hypothesis, whereby management makes linguistic choices and uses rhetorical devices
to conceal negative firm performance.
Rhetorical manipulation involves the exercise of linguistic choices to influence
meaning. Rhetoric is defined as “the art of using language so as to persuade or
influence others; speech or writing expressed in terms calculated to persuade or
impress (often in a depreciatory sense), language characterized by artificial or
ostentatious expression” (Oxford English Dictionary, 1989, p. 857). Llewellyn (1999)
observes that the extent to which the point of a story is persuasive/convincing/credible
depends on its rhetorical power, which in turn is a function of linguistic techniques
such as plots, labelling, metaphor and platitude. To date there has been little research
examining rhetoric and argument in financial reporting (exceptions include Warnock,
1992; 2000 and Brennan and Gray, 2000). Covaleski et al. (1995, p. 26) comment that
“…accounting is not only an instrument for representing an economic reality…but
also a rhetorical device for setting forth…”. Thompson (1991, p. 573) states that “the
way theories are justified and legitimated becomes much more one of a debate,
conversation or argument in which the attempt is to persuade an assumed sceptical
audience. Hence the interest in rhetoric and in the protocols of argumentation.”
Brennan and Gray (2000) examine disclosures in profit forecasts and in takeover
documents from the perspective of rhetoric and argument to show how managements
use accounting information to defend their own position and rebut the arguments of
the other side. Persuasion in forecasts, and the verbal jousting and argument between
bidder and target managements during contested bids, is considered. The plausibility
and credibility of the language used and the arguments offered are analysed.
Attribution of organisational outcomes - Meaning-orientated thematic studies
An alternative to syntactic analysis is thematic analysis. Prior literature using this
approach forms two distinct groups: meaning-oriented and form-oriented studies
(Smith and Taffler, 2000). Form-orientated studies are discussed further on in
connection with attribution in narrative financial reporting.
Meaning-oriented studies using thematic analysis, summarised in Table 1, investigate
patterns of causal reasoning and attribution used to explain corporate performance.
For example, Frazier et al. (1984) apply factor analysis to extract themes from
management analyses of the results of operations in annual reports. The scores from
the factor analysis are used to test for differences between good and bad performers
and between owner-controlled and management-controlled companies. These studies
find that management has a tendency towards self-enhancement by attributing
responsibility for positive outcomes to internal organisational factors; and towards
self-protection by attributing responsibility for negative outcomes to external
Thematic manipulation in accounting narratives – Form-orientated studies
Form-oriented studies predominantly revolve around the use by management of
positive and negative themes, analysing word and sentence frequencies in order to
draw inferences. Examples include Abrahamson and Park (1994), Abrahamson and
Amir (1996), Clatworthy and Jones (2003) and Clatworthy and Jones (2006). Similar
to some other content analysis techniques, there is a degree of subjectivity involved in
this analysis, as it relies upon the classification of keywords into positive and negative
For the method to be reliable, it must include a correct measurement specification
(Jones and Shoemaker, 1994). To date, form-oriented content analysis studies
investigating impression management have been relatively simplistic, for example,
using word counts (Clatworthy and Jones, 2003), number of sentences (Kohut and
Segars, 1992), coding of certain words (Sydserff and Weetman, 2002). Clatworthy
and Jones (2006) is more comprehensive, considering textual characteristics such as
quantitative disclosures, key financial performance variables in the text, personal
references, passive sentences, future-orientated sentences.
Although selectivity in graphs has been studied extensively in prior research, the
scope of this paper is restricted to selectivity in narrative disclosures. Given
discretion, management may select performance numbers (most commonly earnings
numbers) to report/highlight in narratives that portray firms in the best possible light.
Selectivity may be based on numbers generated from generally accepted accounting
principles (GAAP) and non-GAAP numbers (Lougee and Marquardt, 2004). The term
“pro forma” earnings is commonly used in respect of earnings numbers other than
those calculated under GAAP. Two possible explanations for management use of pro
forma earnings have been put forward (Johnson and Schwartz, 2005): (1)
Management are motivated to provide investors with more accurate and/or more
useful information or (2) Managers deliberately make the firm look more profitable.
Where the latter motivation exists, use of pro forma earnings fits the definition of
Consistent with agency theory, managers are likely to select the metric that portrays
the firm in the best light (although there are occasions when the reverse might be true,
e.g., big bath accounting). There is widespread evidence that pro forma earnings
numbers reported in narrative disclosures in press releases are predominantly income
increasing over their GAAP counterpart (Johnson and Schwartz, 2005). This supports
an impression management motivation for such reporting. Johnson and Schwartz
(2005, p. 924) refer to using pro forma earnings for the purpose of “managing
readers’ perceptions of earnings”. They find support for managerial self-serving
behaviour in that pro forma earnings exclude more than non-recurring items. They
also find that firms that report pro forma earnings have earnings that are no different
in persistency compared with firms that report GAAP earnings. This, they say,
contradicts the notion that firms use pro forma earnings to draw investors’ attention to
less persistent, more transitory items in GAAP earnings.
Visual/presentation effects (emphasis)
There are three different ways of emphasising disclosures in narrative financial
reporting documents. Firstly, visual emphasis occurs when companies use
presentation techniques to make a piece of information more obvious to readers.
Examples of such visual emphasis include locating or positioning of disclosures, or
emphasis of text using bullet points, bold text, colour, etc. (So and Smith, 2002;
Courtis, 2004a). A second form of emphasis is repetition, which occurs when an item
is repeated. While Courtis (1996) treats repetition as redundant information, we take a
different approach interpreting its usage as a form of emphasis. Finally, reinforcement
is a form of emphasis which occurs when a piece of information is emphasised by
using a qualifier (an additional word to add emphasis to a keyword, e.g., “Strong
growth” – “growth” is the keyword, “strong” is the qualifier).
Bowen et al. (2005) examine the way in which pro forma earnings and GAAP
earnings in press releases are emphasised. They measure emphasis in two ways:
positioning of the disclosure item of interest (pro forma earnings; GAAP earnings) in
the press release, and the relative positioning of pro forma compared with GAAP
earnings. They find that managers emphasise the metric that portrays the firm in a
Impression management using performance comparisons
Another technique to create an impression of performance that is at variance with the
facts is to choose benchmarks which portray current firm performance in the best
possible light (performance comparisons). Lewellen et al. (1996), Schrand and
Walther (2000), Cassar (2001) and Short and Palmer (2003) investigate the selective
use of a benchmark to highlight positive changes in earnings. Performance
comparisons have been studied in the context of performance referents, benchmark
earnings number, and benchmark comparisons in proxy statements and share
One of the first benchmark studies was Lewellen et al. (1996) who examined ordinary
share price performance benchmarks disclosed in corporate proxy statements. They
found that the benchmarks chosen were biased downwards, which had the effect of
allowing management to overstate relative share return performance.
Short and Palmer (2003) investigate the way CEOs monitor and interpret
organizational performance by means of comparisons of performance indicators
against internal (such as past performance) and external (such as competitors and
industry averages) reference points. They perform content analysis on President’s
Letters to Shareholders of 116 US companies. They find a strong preference for the
use of internal referents (85.4%) as compared with external referents (14.6%) to
assess performance. They find CEOs of large and well-performing companies use
more external referents (comparisons with competitors and industry averages) in their
performance explanations than those of small and poorly-performing companies.
Schrand and Walther (2000) find that managers are more likely to select the lowest
prior period comparative benchmark earnings number that enables them to report the
highest year-on-year increase in earnings.
Cassar (2001) investigates use of benchmark comparisons in share performance
graphs. Almost all sample companies (87%) perform (share price performance and
accumulated share investment) better than their benchmark (generally market
indexes). This suggests that, when managers have discretion, they select the
information presenting the best performance for the company.
This review of prior literature has pointed to many different tactics and methods of
impression management in corporate narrative disclosures in financial reports. These
methods have tended to be considered individually in prior studies. Of the seven prior
impression management methods identified in Table 1, thematic manipulation (form-
orientated studies), selectivity (choice/selection of performance number),
visual/presentation effects (emphasis), and performance comparisons are applied in
this research to the analysis of disclosures in press releases. Table 1 suggests that
these four techniques are among the least researched in prior literature.
3. Methods used to measure impression management in this paper
This section discusses the approach taken to analyse ARPRs. As all four methods
involve manual content analysis, the benefits of manual content analysis and
computer-aided approaches are compared. Examples from press releases are provided
to illustrate the different impression management techniques used in ARPRs.
The disclosure vehicle chosen for this study is the ARPR. As previously mentioned,
these are important disclosure vehicles given their wider dissemination in the media.
ARPRs were chosen for a number of reasons: (1) Most listed companies issue such a
press release. (2) The content of ARPRs is more comparable with respect to content
given that they all have a common purpose (to announce annual results). (3) Some
measures of impression management require a performance number (e.g., selectivity,
performance comparisons). Performance numbers are more likely to appear in
ARPRs, than press releases announcing other corporate events.
ARPRs were first gathered from official sources (Regulatory News Service-RNS).
Where the press release was not available from this source, the company website was
searched. Where the press release was not available from these public sources, the
press release was obtained directly from the company.
Twenty one illustrative examples (excluding Appendix 1) of disclosure practices were
selected from a sample of 101 UK ARPRs
. For the purposes of this paper, the
examples selected are ad hoc and serve to provide illustrative rather than systematic
evidence of disclosure practices. However, as impression management may be
influenced by company performance, a distinction is made between good news and
bad news companies. Classification of good/bad news companies is by reference to
whether reported profits were higher in the current year than the previous year. While
this is a crude dichotomous measure, such an approach is not uncommon (e.g., Staw
et al., 1983; Beattie and Jones, 1992; Clatworthy and Jones, 2001, 2003; Smith and
Taffler, 1992a, b; 1995).
A single year (2000) of data was examined for two reasons: (1) to eliminate the
potential confounding effects of changes in reporting rules over time; and (2) to avoid
the post-Enron period when significant changes in disclosure practice and behaviour
were taking place. Only press releases published before the end of July 2001 were
included in the research, three months before the financial scandals started (Enron
was exposed in October 2001) and five months before the first cautionary advice was
issued by the SEC in December 2001.
Measuring impression management
Four content analysis approaches are adopted in this study: (1) A thematic, form-
oriented analysis based on keywords, statements and amounts; (2) Analysis of
selectivity of quantitative information; (3) Analysis of three visual/presentation
techniques to emphasise including (a) the location, positioning and visual presentation
of disclosures; (b) emphasis by repetition; and (c) emphasis by reinforcing disclosures
and (4) Use of performance comparisons. These four techniques lend themselves to
manual content analysis of disclosures and as such form a methodologically cognate
cluster. The analysis distinguishes between quantitative disclosures in accounting
narratives and qualitative disclosures. Figure 1, which is based on a similar figure in
Beattie et al. (2004), summarises the methods of measuring impression management
adopted in this study and specifies whether the technique is applied to quantitative or
to qualitative disclosures. The coding categories for each impression management
method is also shown.
(Take in Figure 1 about here)
Manual content analysis
Duriau et al. (2007) performed a content analysis on the content analysis literature in
organisation studies. Having listed the advantages of computer aided textual analysis
over manual methods (larger data sets, reliability, speed, lower cost), they express
surprise that only 24 of the 98 papers they analysed report using computers for part or
all of the content analysis. Morris (1994) has tested the validity and reliability of
manual and computerised approaches. She found that computerised and manual
results agreed at an acceptable level, and that computerised coding achieved an
acceptable level of semantic validity. Conversely, in a more recent study, Conway
(2007) found that human and computer-assisted coding yielded significantly different
results in a content analysis of newspaper coverage of a political campaign. He
observes that several subjective steps have to be taken to adapt the content to the
program, and that those decisions can be arbitrary and fall outside the concept of
traditional intercoder reliability. Conway (2007, p. 187), referring to the work of
Linderman (2001) states: “Linderman concluded that comparing human and
computer-assisted coding depends on the complexity of categories, with computers
working best when categories are ‘easy to operationalize’, but human coders working
better with complex categories.” It is our contention that impression management
techniques are subtle and sophisticated, and therefore complex, and warrant manual
Previous studies dealing with the content of accounting narratives have used computer
programmes (e.g., Ingram and Frazier, 1983; Frazier et al., 1984; Tennyson et al.,
1990; Smith and Taffler, 2000; Rutherford, 2005; Henry, 2006; Matsumoto et al.,
2006; Davis et al., 2007) or a mixture of manual and computer coding (e.g., Smith
and Taffler, 1992a; Subramanian et al., 1993; Abrahamson and Park, 1994;
Abrahamson and Amir, 1996; Smith and Taffler, 2000). Others have done all the
coding manually (e.g., Bettman and Weitz, 1983; Staw et al., 1983; Salancik and
Meindl, 1984; Courtis, 1986; Jones, 1988; Lang and Lundholm 2000; Clatworthy and
Jones, 2003). Thus, manual and computerised analyses are not necessarily
alternatives. In many cases both approaches have been used together.
For thematic analysis, computer-based techniques typically rely on software to list the
frequency of occurrence of words which are afterwards coded by researchers (for
example, Abrahamson and Park, 1994). Computerised analysis generally requires lists
of keywords to be assembled in advance, and is not as adept at classifying keywords
depending on context. In manual analysis, the researcher codes keywords and
statements directly from the content of the text analysed. Given the virtually
inexhaustible list of possible keywords, manual coding is arguably more reliable than a
computerised approach (Wallace, 1992). Judgement is required in applying coding
methods in thematic analysis. Even greater subjective judgement is required to analyse
selectivity, visual/presentation effects (emphasis) and performance comparisons.
Similar to other corporate documents, the variety of formats of press releases could be
problematic using computerised coding of visual/presentation effects (emphasis). For
example, some ARPRs include a headline, others do not; some contain only one
paragraph, others contain many paragraphs. A further complication in measuring
selectivity is that the data comes from two sources: ARPRs and annual reports. Given
the limitations of computerised coding in a complex data set, manual analysis is used in
the current study.
Manual content analysis is labour-intensive and time-consuming, which limits sample
sizes. However, content analysis allows more detailed and sophisticated analysis and
comparisons. It has been subject to criticism due to low validity and reliability arising
from the exercise of subjectivity in manual coding. These criticisms are considered
further on in the paper.
Reliability and validity of coding
Reliability in the context of content analysis refers to the amount of intercoder
agreement between multiple coders of the same text. Krippendorff (1980) identifies
three types of reliability: (i) stability, the extent to which the analysis remains
unchanged over time; (ii) reproducibility, the degree to which the analysis can be
recreated using different individuals; and finally (iii) accuracy, the degree to which
the analysis conforms to a standard. Validity, on the other hand, refers to the
appropriateness of the conclusions, given the content analysis methodology adopted.
Morris (1994) describes four types of validity: (i) construct validity, the extent to
which the content analysis variables are correlated with other measures of the same
construct; (ii) hypothesis validity, the extent to which the content analysis variables
behave as they are supposed to in relation to other variables; (iii) face validity, the
extent to which the method appears to measure the construct it is intended to measure;
and (iv) semantic validity, the extent to which persons familiar with the language and
texts agree with the list of words placed in the category have similar meanings or
connotations. Thus, the validity of the underlying classification is dependent on the
researchers’ knowledge and experience of the domain being investigated.
The test for reliability used in this study is consistent with Clatworthy and Jones
(2003), who used a pre-sample of 20 as recommended by Krippendorff (1980) and
Breton and Taffler (2001). In this study, reliability of the coding process for
qualitative data was tested as follows: a pre-sample of 20 press releases was coded by
two independent researchers and the results were compared with recommended
reliability levels. The first coder is one of the authors; the second coder is a researcher
with a background in mass communications.
Of the 20 press releases, ten were selected randomly among good news companies
and ten among bad news companies. The second coder was provided with coding
instructions prepared by the first coder
, copies of the 20 ARPRs, category
definitions (positive/negative keywords/statements), and a form for recording the
number of items in each category for each ARPR. Results of the two coders were
compared with differences teased out and instructions/definitions refined to ensure
consistent coding of the entire sample.
Content analysis techniques involving quantitative disclosures (selectivity,
performance comparisons) were not tested for reliability as these disclosures are
considered to be capable of more objective coding.
Assessing achieved reliability
The coding agreement rate can be calculated using different methods. The simplest
measure is the coefficient of agreement, the ratio of the number of pairwise intercoder
agreements to the total number of pairwise judgements (Milne and Adler, 1999). The
percentage of agreement between coders recommended in the literature ranges from
90% (Clatworthy and Jones, 2003) to 80% (Hackston and Milne, 1996; Milne and
Adler, 1999). One of the limitations of this way of calculating reliability is that, as the
number of coding categories becomes fewer, the likelihood of random agreement
increases. Thus, the coefficient of agreement measure will tend to overestimate the
coders’ reliability and this overestimation increases with fewer categories. In this
study, as shown in Figure 1, the number of categories for each impression
management method is generally relatively low (generally two to three categories)
and therefore the likelihood of random agreement is high.
In this study, the coefficient of agreement is calculated following Milne and Adler
(1999). The correspondence between the two coders was high. Overall, the first coder
identified 1,729 items in the impression management methods and categories
(keywords/statements, emphasis by location/positioning/visual presentation, emphasis
by repetition, emphasis by reinforcement) in the sample of 20 ARPRs analysed, while
the second coder identified 1,681 items, resulting in a concordance of over 95%.
However, agreement for two of the impression management methods was low. The
area of most disagreement concerned emphasis by repetition. For example, whereas
the first coder identified 29 statements (27 positive and two negative) repeated in the
sample of 20 ARPRs, the second coder found only six (five positive and one negative)
resulting in an agreement of only 21%. This may be due to: (1) small counts in some
categories (i.e., number of repeated negative statements coded by the first coder is two
and by the second coder, one; this results in marginal disagreement of 50%); (2)
coding rules are not sufficiently clear. This issue was discussed between the two
coders and all cases were identified, studied and analysed separately. The coding rules
were revised and rewritten as recommended by (Weber, 1990, p. 23).
Another area of lower than acceptable agreement arose in coding emphasis by
location/positioning/visual presentation of disclosures. Coding of the
location/positioning/visual presentation of keywords (64% agreement) and statements
(58% agreement) did not reach the rate of agreement recommended in prior literature.
This is due to variability in coders identifying the length of the sections in press
releases. For example, if one of the coders identifies a longer/shorter most-
emphasised section, the number of keywords/statements included in this section may
vary greatly. For example, in the case of Ashtenne Holdings PLC ARPR 2000, one of
the coders identified the most-emphasised section of the press release to be one single
statement (four words length), whereas the other coder considered the most-
emphasised section as being longer, including a set of five bullet points (114 words
length). In this case, the approach taken to resolve disagreement was the same as for
repetition of statements (i.e., discussion, analysis, and refinement), and the coding
rules for location/positioning/visual presentation were re-written.
In order to resolve disagreement encountered in two of the impression management
methods/categories coded (emphasis by repetition and emphasis by
location/positioning/visual presentation) the following actions were taken: (1) the
coding rules were revised and changed to promote greater consistency following
suggestions from the second coder, (2) all cases of disagreement were checked and
resolved through discussion and (3) using the revised coding rules, a different random
sample of 20 press releases was selected and the coding of the two impression
management methods/categories with high disagreement (repetition and visual
emphasis) was repeated by both coders. Results from this second coding were
satisfactory. The rate of agreement achieved for emphasis by repetition of statements
was 95%, while the rate of agreement for emphasis by location/positioning/visual
presentation reached 84%.
Thematic analysis in press releases
Thematic analysis involves analysing texts for themes or tones of expression. In
content analysis, the unit of analysis can be a word, sentence, theme, paragraph or
even the whole text (Weber, 1990, p. 22). Individual words have no meaning without
a sentence or sentences for context. Hence, there are reservations about computerised
keyword searches. Although computers speed up the coding of reports, they may also
include coding mistakes. In relation to the unit of analysis, Milne and Adler (1999)
distinguish between units used as a basis of coding, versus units of analysis used for
measuring disclosure. They observe that as a basis for coding, sentences have been
shown to be more reliable than any other unit of analysis. Most social and
environmental content analyses use sentences as their unit of analysis. The same unit
of analysis is usually not used for both coding and measuring, with measuring being
more commonly based on words.
In this study, both keywords and statements are analysed, for two reasons: (1) this
approach permits a form of methodological triangulation, cross-checking the analysis
of positive and negative information; and (2) it identifies results where keywords and
statements provide different outcomes. For instance, a statement might include
multiple positive keywords, yet it may be counted as one positive statement. Results
from the study of both keywords and statements are expected to be similar (as
keywords are likely to influence categorisation of statements) and therefore provide a
crosscheck on reliability.
Analysis of keywords
A keyword is one which implies an outcome for the firm. Following prior literature,
positive and negative keywords are identified and coded. A word was coded as
negative/positive under two conditions (Abrahamson and Park, 1994; Abrahamson
and Amir, 1996): (1) The sentence in which it is mentioned includes a
negative/positive outcome for the company; or (2) The sentence mentions the
environment affecting the company negatively/positively.
As shown in Table 1, thematic analysis has been carried out by reference to keywords
(Tennyson et al., 1990; Abrahamson and Park, 1994; Abrahamson and Amir, 1996;
Smith and Taffler, 2000; Clatworthy and Jones, 2003; Rutherford, 2005; Henry,
2006), tone/language (Lang and Lundholm, 2000; Davis et al., 2006), and using other
constructs (Smith and Taffler, 1995; Lang and Lundholm, 2000; Clatworthy and
Jones, 2006; Henry, 2006). The methodology of Tennyson et al. (1990) is complex
and includes analysis of the relationships of the frequencies of words, and factor
analysis of interrelated words into themes. Starting with Weber’s initial content
analysis dictionary, Smith and Taffler (2000) used the Oxford Concordance Program
to augment and generate a dictionary of 168 words. They also analysed linear additive
composite variables. Their measures are scaled by the number of words in the
narrative. Sentences were also analysed thematically.
This research uses simpler methods of thematic analysis. A list of keywords was
developed, starting with lists from prior research. Three such lists were used:
Clatworthy and Jones (2003) for positive keywords; and Abrahamson and Park
(1994), Abrahamson and Amir (1996) and Clatworthy and Jones (2003) for negative
keywords. These lists were added to during the subsequent coding of the sample of
101 press releases, culminating in a final list of 301 keywords.
Rutherford (2005) and
Henry (2006) also used
word lists (90 and 190 words, respectively). All except 18
of the 190 words in Henry’s list are common to the lists in this paper.
Rutherford’s word list is not comparable to the list in this paper as he does not classify
words between positive and negative. Unlike other researchers, Rutherford (2005) did
not treat grammatical variations separately. He combined 16 words that were closely
related (i.e., singular and plural manifestations). Conversely, Henry (2006) treated
similar words separately.
Table 2 analyses the number of keywords in this study between positive and negative
and by reference to their use in prior literature. Of the 301 keywords, 127 (>40%) are
unique to this research. This is due to a number of factors: (1) the present study
includes all keywords appearing in the press releases, even though the usage
frequency might be very limited (e.g., the words “disruption”, “boosted” and
“rockets” appear only once in the sample), (2) similar to Abrahamson and Park
(1994), Abrahamson and Amir (1996) and Clatworthy and Jones (2003), grammatical
variations of words are also counted as separate keywords (e.g., “extended”,
“extending”, “extensions” and “extensive”). For example, out of 109 positive
keywords new to the current study, 39 are grammatical variations of other keywords
(i.e., “lead” is a keyword new to this study; however, there were three grammatical
variations also used in the analysis “leader”, “leadership” and “leading”).
Table 2: Keywords used in this research
Keywords used by both A&P/A&A and C&J None 57 57
Keywords used by A&P/A&A only None 2 2
Keywords used in C&J only 108 7 115
Keywords unique to this study 109 18 127
Total number of keywords used in this research 217 84 301
A&P/A&A–Abrahamson and Park (1994) / Abrahamson and Amir (1996) (only negative keywords)
C&J – Clatworthy and Jones (2003)
Following Clatworthy and Jones (2003), coding of a keyword between negative and
positive depends on the context in which it is used. Coding has to be done in context
in order to differentiate between different meanings and connotations of keywords. To
illustrate, Example 1 shows a sentence with three keywords. The words ‘up’ and
‘increase’ are both individually considered positive (because they are associated with
the phrases ‘profit before tax’ and ‘dividend per share’) while ‘down’ is a negative
keyword (because it is associated with the phrase ‘investment profit’).
Example 1: Keywords (Brixton Estate plc ARPR 2000)
Profit before tax up
7.4% to £43.5m; investment profit down
2.2% to £39.6m;
total dividend 10.3p per share, an increase
In Example 2 ‘ahead’ in the first extract means greater than global market growth and
is counted as a keyword. In the second extract, ‘ahead’ is a reference to the following
year and is not counted as a keyword. A simple word count, whether conducted by
computer or by person, will not highlight such contextual differences.
Example 2: Keywords in context (Aegis Group plc ARPR 2000)
Turnover £5,712.5 million, up
19.2% (1999: £4,791.8 million) - ahead
global market growth…
….which leads me to be optimistic
about our prospects for the year ahead
Analysis of statements
In this study, a statement is defined as “a cluster of words with different meanings or
connotations that, taken together, refer to some theme or issue” (Weber, 1990, p. 37).
This allows for the occurrence of more than one statement within a sentence. Similar
to keywords, statements are classified into positive and negative.
The definition of a statement can be ambiguous. Sentence, phrase, statement and
theme all have similar meanings and can be used by researchers interchangeably. For
example, Clatworthy and Jones (2003) use the terms “sentence” and “statement”
interchangeably (confirmed by one of the authors in personal communication).
Further, the definition can be adapted for a particular type of study. For example,
Salancik and Meindl (1984, p. 245) define causal statements as “those that relate two
events by a causal connective or connective phrase such as ‘caused’, ‘if then’,
‘because’, ‘attributable to’; and so on”. Similarly, Aerts (2001, p. 13) defines
statements as “a phrase or a sentence in which a corporate event or performance
outcome was linked with a reason or cause for the event or outcome”. Although, as
seen above, “statement” and “sentence” can be interchangeable, a sentence may
include more than one statement. This implies that, where a sentence deals with more
than one issue that could be analysed separately, the issues should be treated as
separate statements. Example 3 illustrates the inclusion of more than one statement
within a single sentence. Four statements can be identified from the sentence (three
positive, one negative).
Example 3: Analysis of press releases by statements (Dawson International PLC ARPR
Many challenges lie ahead
but we believe we have the foundations to build on the
many achievements of the last 12 months
, deliver our stated goals
remain focused on further improving shareholders value
The first sentence in Example 4 includes three positive keywords (“improved”,
“biggest”, “improvement”) and two positive statements. The second sentence includes
one positive keyword (“up”) and one positive statement. The analysis using
statements as the unit of analysis is different in that there are only three positive
statements in total, compared with four positive keywords.
Example 4: Statement including varying numbers of keywords (British Airways PLC
Passenger yields per RPK improved
by 7.7 per cent
, the biggest
since privatisation in 1987
Group turnover for the full year was up
3.8 per cent at £9,278m (£8,940m)
Table 3 shows a list of words with positive connotations (positive keywords) and
negative connotations (negative keywords) used by TDG Plc. (The actual wording of
the press release is reproduced in Example 5). As previously mentioned, context is
important in the coding process. The word “reduction” is a negative keyword because
it is associated with the word “profits”. Although the company experienced a decrease
in profit (Profit after tax fell from £15.7 million in 1999 to £9.2 million in 2000), the
list of keywords in Table 3 shows how the company creates a positive impression.
There are only three negative keywords whereas there are 15 positive keywords (one
of which, “up”, is mentioned five times) included in the press release.
Table 3: List of keywords TDG Plc ARPR 2000
1. Growth Keyword+1 1. Reduction Keyword–1
2. Up (x 5 times) Keyword+2,3,5,6,9 2. Decline Keyword–2
3. Excellent Keyword+4 3. Down Keyword–3
4. Improved Keyword+7
5. Increased Keyword+8
6. Significance Keyword+10
7. Grow Keyword+11
8. Profitably Keyword+12
9. Effective Keyword+13
10. Strong Keyword+14
11. Progress Keyword+15
Key: Keyword + : Positive; –: Negative
Example 5 also shows the analysis of the press release into positive and negative
statements. The analysis of statements shows similar results to that using keywords.
The number of positive statements is much higher (at 12) compared with the number
of negative statements (at two). Although profits fell, the higher number of positive
than negative statements implies a more positive performance than the actual
underlying financial position of the company would suggest.
Example 5: Identification of positive and negative keywords and statements in press release
(TDG Plc ARPR 2000)
IN CONTRACT LOGISTICS
• Group turnover up
7% to £456 million (up
9% at constant exchange
performance from core Contract Logistics business across Europe
- Turnover up
and Operating profit up
• Profit reduction
in Storage & Distribution due to first half decline
in cold store
Second half performance significantly improved
• Overall, headline profit before tax down
6% to £24.7 million
• Final dividend increased
by 5% to 7.4p, giving 12.4p for the year, up
• Announcement today of alliance with Eagle Global Logistics
David Garman, Chief Executive of TDG, commented:
‘In December 1999, we announced a forward strategy to transform TDG from a predominantly UK
and asset-based business, to a truly Europe-wide, solutions based provider of logistics services. Our
results for the year reflect the significance
and scale of our transformation during this
We have demonstrated that we can grow
our Contract Logistics businesses rapidly and
. We have also taken effective
action to resolve issues in parts of
our Storage & Distribution business
. We have a strong
who are focused on delivery, and I am looking forward to reporting on further progress
Note: Positive statements 3 and 9 are considered repetitions of positive statement 1. Repetition is
discussed later in the paper.
Analysis of amounts
Thematic analysis is also applied to quantitative amounts included in narrative
disclosures in ARPRs. An amount is coded as positive or negative depending on
whether the current year amount is higher or lower than the prior year amount.
Categorisation of amounts into positive or negative is only possible where the
comparative amount or an explicit statement of the direction of the item is provided in
the ARPR itself.
Analysis of selectivity in press releases
Companies are expected to be selective in the financial amounts they disclose in press
releases, choosing higher profit/earnings per share numbers from the range of
numbers available for disclosure because this shows a better picture. Wolseley plc
illustrates the second type of selectivity in Example 6 – picking the “better” profit
amount from a selection of profit numbers which could be used in the press release.
Example 6: Selection of profit and EPS figures for inclusion in the ARPR from the P&L
account (Wolseley plc ARPR 2000)
Group trading profit up £60 million (19.2%) to £373.2 million
Earnings per share before exceptionals and goodwill amortisation up 11.0% to 42.26 pence
Note: See full profit and loss account of Wolseley in Appendix 1 which shows the full choice
of profit figures and EPS figures from which the above selections were made
Wolseley plc performed relatively poorly in 2000 (Profit after tax and minority
interests 1999: £198.9 million; 2000: £193.5 million). Wolseley plc’s full profit and
loss account is shown in Appendix 1. It contains ten profit numbers (marked from
to in Appendix 1) and three earnings per share amounts (marked from to in
Appendix 1) on the face of the profit and loss account from which to select for
disclosure in the press release. Influences on the number to select are likely to be two
fold: the absolute amount of profit and the increase shown by that amount over the
prior year amount. Of the ten profit numbers, four (from profit on ordinary activities
before tax onwards to ) show a decrease over the previous year. The profit figure
selected by the company for inclusion in the press release (Operating profit) is the
second largest amount (in absolute terms) of the ten profit figures in the profit and
loss account showing an increase of 19.2% over the prior year. Had the largest
absolute amount been chosen, this would only have shown an increase of 16.8% over
the prior year. This possibly accounts for the choice of second highest profit amount.
The only amount that could have shown a better picture would have been profit before
goodwill amortisation and after exceptional items, which shows an increase of
21.1% over the previous year. Profit before tax and interest is not selected, possibly
as this only shows an increase over the previous year of 6.6%.
The earnings per share figure selected for inclusion in the press release is the largest
of the three earnings per share figures on the face of the profit and loss account, and is
the only one that shows an increase over the prior year amount. The profit amount
selected is after goodwill, exceptionals and before loss on disposal of discontinued
operations. However, the earnings per share amount selected is before goodwill and
To convert selectivity to a common-size measure, regardless of the number of
profit/earnings per share amounts disclosed in the profit and loss account, the
following approach is adopted in this study. All profit and EPS figures reported on the
face of the profit and loss account are ranked from the lowest amount to the highest
amount, based on monetary value (see illustration in Appendix 1). The amount
selected for inclusion in the press release is identified. The amount chosen for
inclusion in the press release is assigned to one of three categories of selectivity,
High, Medium, Low. Figure 2 illustrates the categorisation of selectivity, assuming
ten earnings amounts are disclosed in the profit and loss account (i.e., the number of
profit amounts in Wolseley plc’s profit and loss account in Appendix 1).
Figure 2: Measuring selectivity: Assigning categories
In addition to selecting from the financial statements the best numbers to disclose,
companies may disclose amounts that are not reported in the financial statements
(although they may appear elsewhere in the annual report). The following example
illustrates this practice. In Example 7, Barclays’ ARPR includes operating profit of
£3,580 million for the year 2000. This information is shown as the first item, in bullet
point, at the beginning of the press release. Further down in the press release (in the
least-emphasised section – see below for a discussion of least/most-emphasised), the
operating profit of £3,580 million is shown to include the results of an acquisition and
to exclude the 1999 and 2000 restructuring charges, goodwill amortisation and costs
directly associated with the integration of this acquisition. The actual operating profit
on the face of the profit and loss account is £3,290 million, £290 million lower than
the number disclosed in the press release. The operating profit included in the ARPR
is what would be referred to as a pro forma earnings number in the US literature.
Example 7: Selection of performance figures from the P&L account (Barclays PLC
• Operating profit rose 21% to £3,580 million from £2,964 million
• Exceptional items of £214 million, up from a deficit in 1999 of £138 million. This
includes sale of Dial and Barclays Property Investment Management
• Profit before tax up 42% to £3,496 million from £2,455 million
• Business as usual costs savings of £260 million
• Woolwich acquisition expected to lead to pre tax synergies of more than £400 million per
annum by 2004, up from forecast £240 million
• Earnings per share based on operating profit above, up to 163.6p from 143.6p
• Dividend per share up 16% to 58.0p from 50.0p
• £26.3 million donated to the community
Operating profit shown above includes the results of The Woolwich from 25
It excludes the 1999 and 2000 restructuring charges, goodwill amortisation and costs directly
associated with the integration of The Woolwich. Earnings per share based on this operating
profit also exclude exceptional items.
Analysis of emphasis in press releases
Emphasis as an impression management tool assumes that the reader notices the
information emphasised more. Emphasis is analysed in three different ways in this
study. Firstly the location/positioning of the disclosures are analysed, which analysis
is also influenced by the visual presentation techniques used in displaying the
disclosures (visual emphasis or degree of prominence). Secondly, the use of repetition
to emphasise a number is analysed. Finally, the use of reinforcement to emphasise
qualitative disclosures is analysed. This is the first time this impression management
technique has been studied.
Empirical studies in accounting examined/investigated the importance of the location
or the order in which information appears in company reports. Staw et al. (1983)
investigate the location of positive and negative information in accounting narratives.
Bowen et al. (2005) investigate the extent to which managers place performance
metrics strategically within their earnings press releases. They compare the placement
of two metrics: GAAP vs. pro forma information. Their results confirm that managers
emphasise the metric that portrays better firm performance by giving that metric a
more prominent location in the press release. Thus, the figure showing better
performance (GAAP or non-GAAP figure) is more likely to appear in an earlier
section (headline or first paragraph) of the press release, whereas the figure showing
worse performance is buried down in the main body of the press release.
To analyse visual emphasis, sections of each press release are assigned three levels of
emphasis: (1) most-emphasised, (2) next-most-emphasised and (3) least-emphasised
(see Figure 3). This methodology is adapted from (Staw et al., 1983; Bowen et al.,
2005). Visual emphasis is defined as the emphasis provided by prominent
location/positioning (e.g., heading and subheadings), special character (e.g., bullet
points), type of font (e.g., bold, italics, underlining, colour), or a combination of two
or more of these (Figure 3 illustrates these varying degrees of prominence). Press
releases do not have a standard presentation/format. For this reason, classification of
disclosures between the three categories (most-emphasised, next-most-emphasised
and least-emphasised) requires judgement. Some press releases use explicit visual
emphasis techniques while others do not. Where no visual emphasis is used, three
levels of emphasis (most-emphasised, next-most-emphasised and least-emphasised)
are defined by reference to the location/positioning of information in the press release
following Bowen et al. (2005). The basic idea is that earlier text in press releases is
given greater emphasis simply because it comes first. Paragraphs one and two are
considered to be the most-emphasised, paragraphs three and four are the next-most-
emphasised, and information after paragraph four is considered the least-emphasised.
Press releases which use these emphasis techniques may include three degrees of
visual emphasis: (a) a press release with only one form of emphasis (for example,
headline) followed by plain text. In this case, the section of the press release with the
visual emphasis is coded as the most-emphasised section while the methodology used
by Bowen et al. (2005) is applied to the plain text. Therefore, the first and second
paragraphs are coded as next-most-emphasised section, and the remainder of the text
is coded as the least-emphasised section; (b) the text presents at least four (for
example, headline, subheadings, bullet points and bold text) of the methods described
in Figure 3. In this case, the headline is considered the most-emphasised section of the
press release. Use of subheadings, bullet points or bold text is coded as next-most-
emphasised section, and the plain text is coded as least-emphasised section of the
press release; and (c) when either two or three methods of emphasis from those
described in Figure 3 are used. In this situation, the highest of the four methods
identified in Figure 3 is coded as most-emphasised section. Plain text is coded as the
least-emphasised section of the press release and anything in between is the next-
most-emphasised section of the press release.
Figure 3: Visual emphasis or degree of prominence
Ranking of emphasis
Emphasis – Location/positioning/presentation of qualitative information
Visual emphasis refers to the location or positioning of disclosures in the press
release. Location/positioning may depend on whether the disclosure refers to positive
or negative events or outcomes. For example, a company might want to include
negative information in a less prominent location. Example 8 illustrates the approach
taken in coding a press release into the three location/positioning categories (most-,
next-most, least-emphasised). As shown in Example 8, even though TDG Plc is a bad
news company, Positive Statement 1 (a positive statement by inclusion of a positive
keyword) is the headline in the press release. Although two negative statements are
included in the next-most-emphasised section of the press release, the positive
statements are exaggerated by their inclusion in the headline. The two negative
statements are under-stated by being located further down in the press release.
Example 8: Different emphasis by location/positioning/visual presentation of positive/negative
statements (TDG Plc ARPR 2000)
Location of text
IN CONTRACT LOGISTICS
• Group turnover up
7% to £456 million (up
constant exchange rates)
performance from core Contract Logistics business
– Turnover up
• Profit reduction
in Storage & Distribution due to first half
in cold store utilisation.
Second half performance
• Overall, headline profit before tax down
6% to £24.7
• Final dividend increased
by 5% to 7.4p, giving 12.4p for the
• Announcement today of alliance with Eagle Global Logistics
David Garman, Chief Executive of TDG, commented:
‘In December 1999, we announced a forward strategy to transform TDG from a
predominantly UK and asset-based business, to a truly Europe-wide, solutions
based provider of logistics services. Our results for the year reflect the
and scale of our transformation during this transition
We have demonstrated that we can grow
our Contract Logistics
businesses rapidly and profitably
. We have also taken
action to resolve issues in parts of our Storage & Distribution
We have a strong
focused on delivery, and I am looking forward to reporting on further
Emphasis – Location/positioning/presentation of quantitative information
Most ARPRs studied disclose positive amounts in the most-emphasised section of the
press release. Few of the press releases include one or more negative amounts in the
most-emphasised section. In Example 9, QXL ricardo plc includes seven quantitative
items. Although the company performed poorly (Losses after tax before minorities
2000/01: £(143.1) million; 1999/00: £(66.7) million), six of the seven disclosures are
positive. Only one negative item (Quantitative item 7) is disclosed in the press
release. This item is placed in the least-emphasised section after disclosure of all
positive quantitative items.
Example 9: Quantitative information and visual emphasis (QXL ricardo plc ARPR 2000)
No quantitative items included
Quantitative item 1: Positive quantitative item
Growth in agency-based Gross Auction Value of 42%
Quantitative item 2: Positive quantitative item
Gross profit increased 35%
Quantitative item 3: Positive quantitative item
A 319% increase in Gross Auction Value to £89.3 million for the year, compared to £21.3
million for the year ended 31 March 2000
Quantitative item 4: Positive quantitative item
Total members increased to 2.9 million at 31 March 2001, a 415% increase compared to
557,000 at 31 March 2000
Quantitative item 5: Positive quantitative item
Number of items listed for auction increased to 31.7 million for the year ended 31 March
2001, a 484% increase compared to 5.4 million for the year ended 31 March 2000
Quantitative item 6: Positive quantitative item
Gross profit up to £2.6 million, an increase of 258% over £741,000 for the year ended 31
Quantitative item 7: Negative quantitative item
Trading loss of £49.4 million, compared to a loss of £32.8 million for the year ended 31
Emphasis – Repetition of qualitative information
Repetition of information can enhance the understandability of financial reports or it
can add noise to the reporting process (Courtis, 1996). Courtis (1996) investigates the
presence of superfluous disclosures in Hong Kong annual reports by testing redundant
disclosure (such as repetition) against some corporate attributes (size, profitability,
risk and industrial grouping). For the purposes of this study, repetition is said to occur
when a press release includes the same piece of information more than once. A
statement is deemed to be repeated even where there is slight variation in one or two
words in the two statements. This technique can be misleading for two reasons: (1)
the press release is a short document (2 pages on average) and repetition of the same
issue more than once can cause the reader to focus on that specific issue while
diverting attention from other issues in the press release and (2) this practice can be
misleading if the manager repeats positive information but not negative or vice versa.
An example of repetition of a statement has already been presented in Example 5
where a single piece of information (positive information) was repeated three times.
Example 10 also illustrates this practice where substantial new business is
emphasised. This emphasis in the headline is can be exacerbated by repetition of
positive statements as illustrated in Example 10. This suggests that it is not enough to
look at individual impression management techniques in isolation. The interaction
effects of using two or more impression management techniques at the one time must
Example 10: Multiple repetition of positive statements (Aegis Group plc ARPR 2000)
Record new business performance reflects effective strategy
First repetition in main body
Record new media business wins totalling $2,050 million (1999:$1,206 million)
Second repetition in main body
2000 was a good year for Aegis with a record $2 billion of new media business won during
Emphasis – Repetition of quantitative information
As is the case with qualitative information, repetition of quantitative information is
also common practice. This consists of reiterating the same amount more than once in
the same press release. The three statements shown in Example 11 are included in
different parts of the press release. The first one is in the headline. The second is the
first repetition occurring in the main body of the press release. The third statement is
the second repetition of the same quantitative item.
Example 11: Repetition of quantitative items (British Airways PLC ARPR 2000)
Full year profit of £150 million
First repetition in main body
Full year pre-tax profit of £150 million, up from £5 million a year ago
Second repetition in main body
British Airways today posted a pre-tax profit of £150 million for the 12 months ended March
31, 2001 (2000: £5 million)
Emphasis – Reinforcement of qualitative information
Reinforcement occurs when emphasis is added to a particular keyword by use of a
qualifier. Although it is not a pervasive practice, its inclusion in this study is
considered important as evidence of one of the disclosure practices used by managers
when preparing their reports. This impression management technique has not been
studied in prior literature. TDG Plc ARPR 2000 (Example 12), a bad news company
(profit in current year lower than prior year), discloses four reinforcements. One of
them (Reinforcement 3) is a double reinforcement where two qualifiers “rapidly” and
“profitably” reinforce one positive keyword “grow”. The other three are
reinforcements of positive keywords. The words “strong” (Reinforcement 1),
“significantly” (Reinforcement 2) and “further” (Reinforcement 4), reinforce the
positive keywords “growth”, “improved” and “progress”, respectively.
Example 12: Multiple reinforcement of positive keywords (TDG Plc ARPR 2000)
Reinforcement 1: Reinforcement of positive keyword (headline)
Strong growth in contract logistics
Reinforcement 2: Reinforcement of positive keyword (main body)
Second half performance significantly improved
Reinforcement 3: Double reinforcement of positive keyword (main body)
We have demonstrated that we can grow our Contract Logistics businesses rapidly and
Reinforcement 4: Reinforcement of positive keyword (main body)
I am looking forward to reporting on further progress in 2001
Another method falling within the technique of reinforcement of qualitative
information is diminution of keywords. This occurs when a keyword is accompanied
by a qualifier which lightens its effect. This practice is more likely to occur with
negative keywords than with positive keywords. Example 13 illustrates this issue. The
qualifier “a little” de-emphasises the negative connotation of the keyword “fallen”.
Example 13: Diminution of negative keywords (Silentnight Holdings Plc ARPR 2000)
Since then demand has fallen a little, particularly for cabinet and upholstered furniture
In Example 14, the word “slightly” de-emphasises the word “ahead”, showing that the
company met its forecast, without exceeding it too much which might suggest
inaccurate forecasting by the company.
Example 14: Diminution of positive keywords (Uniq plc ARPR 2000)
Profit before tax, exceptional items and goodwill amortisation of £57.5m, slightly ahead of
profit forecast made in March 2001
Analysis of performance comparisons in press releases
Prior research has studied performance comparisons from the point of view of
managers selecting performance comparisons that allow the best performance to be
portrayed. We look at performance from a different perspective - as a means of
reinforcing quantitative information in press releases. Quantitative information about
performance can be provided in terms of monetary and non-monetary amounts. Non-
monetary quantities are also coded, depending on their format/presentation, e.g.,
numbers, percentages. Percentages are used with benchmarks of company
performance related to either prior period(s) or industry performance. Such
benchmarks are commonly provided in press releases. The percentage might be
disclosed on its own or together with a current year monetary amount.
Quantified monetary amounts with comparisons are classified into three categories –
positive, negative and neutral amounts – depending on whether the amount
highlighted has increased, decreased or remained unchanged compared with the
comparator. Performance comparisons are a form of emphasis in that they reinforce a
quantitative amount. Reinforcement of quantitative items occurs when managers
disclose: (1) a benchmark indicating the percentage change over the prior year
together with the current year amount; or (2) the amount from the prior year together
with the current year figure. The company can also choose to report both: a
benchmark in the form of a percentage and the amount from the prior year together
with the current year figure. The latter represents double emphasis, whereas options
(1) and (2) are single emphasis. Example 15 illustrates these practices.
Example 15: Reinforcement of quantitative items: single emphasis (Wolseley plc ARPR
Reinforcement including a benchmark in the form of percentage
Pre-tax profit before exceptionals and goodwill amortisation up 9.4% to £357.4 million
Reinforcement including prior year amount
£288 million (1999: £310 million) invested in acquisitions
Double emphasis allows the reader to cross-check the calculation and is more
transparent, but less common. Categorisation into positive/negative amount is only
possible where the comparative amount is provided in the ARPR itself (Hoskin et al.,
1986). Where categorisation into positive/negative is not possible, the amount is
deemed to be neutral. In general, we expect management to disclose performance
comparators that reflect the company’s performance in a positive rather than negative
For example, TDG Plc includes six monetary and non-monetary disclosures in its
press release, five of which are positive figures and only one negative. Quantitative
item 1 in Example 16 is positive (increase in Group turnover). Quantitative items 2
and 3 show an increase in business segment turnover and operating profit. One
negative quantitative item (Quantitative item 4) shows a decrease in headline profit
before tax (before exceptional items and amortisation). In Quantitative items 5 and 6,
final dividend and dividend for the year are shown to have increased by 5%.
Example 16: Reinforcement of quantitative items included in the ARPR (TDG Plc ARPR
Quantitative item 1: Reinforcement of positive quantitative item
Group turnover up 7% to £456 million
Quantitative items 2 and 3: Reinforcement of positive quantitative item (two quantitative items)
Excellent performance from core Contract Logistics business across Europe - turnover up 14%
and operating profit up 18%
Quantitative item 4: Reinforcement of negative quantitative item
Headline profit before tax down 6% to £24.7 million
Quantitative items 5 and 6: Reinforcement of positive quantitative item (two quantitative items)
Final dividend increased by 5% to 7.7p, giving 12.4p for the year, up 5%
Use of comparisons is also illustrated in Example 6 earlier. Although Wolseley plc
performed relatively poorly in 2000 (Profit after tax and minority interests 1999:
£198.9 million; 2000: £193.5 million) the two performance numbers (profit and
earnings per share) selected for disclosure show substantial increases against their
prior year comparators.
Companies may be influenced in their use of reinforcement depending on whether the
figures are positive or negative. For example, a company may disclose negative
quantitative items without reinforcement but use reinforcement with positive amounts.
British Vita (Profit after tax and minority interests 1999: £48.5 million, 2000: £43.3
million) performed relatively poorly in 2000. The annual report shows that the profit
before tax for the current year was only £80.1 million compared with a prior year
profit £84.6 million. In Example 17, British Vita PLC does not include a benchmark
with the profit before tax amount disclosed, which hides or disguises the decrease in
profit from the prior year.
Example 17: No reinforcement of negative quantitative item (British Vita PLC ARPR
Profit before Tax of £80.1m
City North Group plc also performed poorly in 2000 (Profit after tax and minority
interests 1999: £1,768,000, 2000: £715,000). In Example 18, despite poor
performance in 2000 compared with 1999, City North Group plc reports only positive
amounts and all include a benchmark showing increases from prior year.
Example 18: Reinforcement of positive quantitative items (City North Group plc ARPR
Quantitative item 1: Reinforcement of positive quantitative item
Net assets up 22% to £62,400,000
Quantitative item 2: Reinforcement of positive quantitative item
Diluted net asset value per share up 21% to 278p
Quantitative item 3: Reinforcement of positive quantitative item
Rental income up 17% to £4,080,000
Quantitative item 4: Reinforcement of positive quantitative item
Operating profit up 17% to £2,390,000
Companies may disclose in the ARPR a current year amount that best portrays
performance compared with a prior year benchmark. In Example 19, National Grid
plc discloses profit before tax and exceptional items of £481.3m in its ARPR. This
amount does not appear in the related group profit and loss account. The amount
disclosed of £481.3m is calculated as the profit before exceptional items of £731.9m
less net interest of £250.6m, both of which amounts do appear on the face of the
group profit and loss account. Selecting this idiosyncratic amount of £481.3 allows
National Grid plc to provide the best possible prior year comparative benchmark of
£481.6m (Profit before exceptional items of £546.5m less Net interest of £64.9m)
against which to compare the amount disclosed. This allows management to suggest
in the ARPR that performance is “level” compared with the previous year. No other
combination of current year and prior year profit amounts would portray as good a
picture of National Grid plc’s performance.
Example 19: Selectivity and benchmarking (National Grid plc ARPR 2001 & Annual
Allowing for the higher interest expense, we held pre-tax profit before exceptional items and
goodwill amortisation level at £481.3 million and increased earnings per share on the same basis
by 9 per cent. We also had exceptional profits of over £470 million relating to the reduction in
our holding in Energis.
Extracts from Annual Report 2000
Group profit and loss account for the years ending 31 March 2001 2000 1999
£m £m £m
– Before exceptional integration costs and goodwill amortisation 731.9 546.5 579.9
– Exceptional integration costs (45.3) – –
– Goodwill amortisation (74.5) (7.9) (2.5)
Total operating profit – continuing operations 612.1 538.6 577.4
Exceptional profit relating to partial disposal of Energis 242.9 1,027.3 891.8
Profit on disposal of businesses 20.1 – –
Net interest (250.6)
Exceptional cost of closing out interest rate swaps – – (52.6)
Profit on ordinary activities before taxation – continuing operations 624.5 1,501.0 1,298.1
Taxation 149.6 (352.6) (283.1)
Profit on ordinary activities after taxation 774.1 1,148.4 1,015.0
Earnings per ordinary share
– Basic, including exceptional items and goodwill amortisation 52.1p 78.0p 69.2p
– Basic, excluding exceptional items and goodwill amortisation 26.5p 24.3p 23.3p
– Diluted, including exceptional items and goodwill amortisation 49.5p 73.4p 65.2p
– Diluted, excluding exceptional items and goodwill amortisation 25.8p 23.8p 22.7p
Comparing disclosure of quantitative and qualitative information in ARPRs
Companies can manipulate quantitative and qualitative information to create
impressions. For example, a statement might include a negative quantitative item
displayed in neutral terms (without showing the prior year amount). This negative
quantitative item can even be shown in such a way as to be construed as a positive
Skinner (1994) has found that companies are more likely to disclose positive
information in quantitative format and negative information in qualitative format.
Consistent with this finding, Manganese Bronze Holdings PLC includes four negative
statements in its ARPR 2000 (Example 20). Each of these four statements is in
narrative form, with no quantitative negative items being disclosed.
Example 20: Negative information in qualitative format (Manganese Bronze Holdings
PLC ARPR 2000)
Negative statement 1:
Negative statement 2:
Negative statement 3:
Negative statement 4:
Components Division continued to suffer losses
However, increased production costs have led to reduced margins
The Components Division again lost money mainly affected by a
shortage of sales of sintered components to the motor industry
If market conditions remain as at present we expect lower profits for
our Vehicles Division in the current year
Companies may also disclose negative items in a neutral way. For example,
Stagecoach is classified as a bad news company (Profit / (loss) after tax and before
minority interests 1999: £38 million; 2000: (£332) million). Stagecoach Group plc
ARPR 2000 (Example 21) includes positive information in quantitative and
qualitative format and a negative item as part of a neutral statement.
Example 21: Qualitative and quantitative information (Stagecoach Group plc ARPR
Positive statement and positive quantitative item
Turnover excluding discontinued operations £2,067.3 million, up 17.4%
Neutral statement and negative quantitative item
Profit before tax, goodwill amortisation and exceptional items £122.9 million (2000: £244.3
Impact of range of impression management techniques
The 21 examples in this paper, together with Appendix 1, illustrate the myriad of
techniques adopted by companies to present company performance in their narrative
reports. It is only possible to obtain a fuller picture of reporting practices by
considering these techniques together.
Section 4 of the paper develops the qualitative and quantitative measures of
impression management into two composite impression management scores using the
four qualitative measures ((i) Thematic – keywords and phrases – no. positive; no.
negative; (ii) Emphasis – Location; (iii) Emphasis – Repetition and (iv) Emphasis –
Reinforcement) and the five quantitative measures discussed earlier ((i) Disclosure of
quantitative performance monetary and non-monetary amounts; (ii) Selectivity; (iii)
Emphasis – Location; (iv) Emphasis – Repetition and (v) Performance comparisons.
4. Constructing a composite impression management score
Composite scores – weighted averages of a number of underlying variables – are
common in research, e.g., Altman Z-score, disclosure indices, governance scores. The
justification for using such scores is that one metric alone can give a misleading
picture. Equally, is difficult to reduce complex corporate processes to a single
measure. Our thesis is that impression management should be measured in a holistic
manner, and not merely by using a single measure of impression management. Thus,
we have devised two synthesised measures resulting in two composite impression
management scores based on the four qualitative/five quantitative measures referred
to above. Beattie et al. (2004) also develop a holistic measure for analysing narratives
in annual reports. They use computer-assisted methods for implementing their four-
dimensional framework for holistic content analysis of accounting narratives.
Calculation of composite impression management scores for qualitative disclosures
The qualitative composite impression management score is based on either (i)
keywords or (ii) statements, combined with evidence of three types of emphasis
(location/positioning, repetition, reinforcement). The analysis varies in that only
reinforcement of keywords can be measured (measurement of repetition of keywords
is not feasible). Only repetition of statements can be measured, while measuring
reinforcement of statements is not practicable.
Disclosures are made in a hierarchical manner, and the qualitative composite
impression management score includes weightings to capture this hierarchy.
Weighting systems are common in research but there is no method that is universally
accepted. Such weightings are subjective. It is highly questionable how to weight
different elements in a composite impression management score. To take account of
this subjectivity, it is recommended that the weightings be varied in empirical
research using a composite impression management score, and that empirical results
be subjected to sensitivity analysis to check whether variations in the weightings
influence the results.
Table 4 summarises the weightings to be applied and the resulting calculation of
qualitative composite impression management scores. Weightings in this context are
summative, not multiplicative. Each keyword/statement is given a weighting of 1.0. If
the keyword/statement appears in the most-emphasised section, a weighting of 1.0 is
added; for the next-most emphasised section a weighting of 0.5 is added; the least-
emphasised section attracts no weighting. If the keyword is reinforced a weighting of
0.5 is added. If the statement is repeated, a weighting of 0.5 is added. Gordon et al.
(2007) also aggregate individual elements in calculating a composite score for
management credibility and for restatement announcement characteristics. Similar to
the method in this paper, they apply a combination of weightings of 1 and 0.5 for
elements of their aggregated composite score.
Applying these weightings, the resulting qualitative composite impression
management score will vary from a maximum of 2.5 (e.g., where a keyword is
included in the most-emphasised section of the ARPR, the statement of which it is
part is repeated and the keyword is reinforced) to a minimum of 1.0 (e.g., where a
keyword is included in the least-emphasised section of the ARPR and is not
reinforced, and the statement of which it is part is not repeated).
Table 4: Method for calculating qualitative composite impression management scores
(i) Thematic – keywords/statements 1.0
(ii) Emphasis – Location: Most-, next-most, least-emphasised 1.0/0.5/0.0
(iii) Emphasis – Repetition (Statements only) 0.5
(iv) Emphasis – Reinforcement (Keywords only) 0.5
Maximum possible composite score per keyword/statement 2.5
Minimum possible composite score per keyword/statement 1.0
Calculation of composite impression management scores for quantitative disclosures
In the first instance, quantitative disclosures in ARPRs are given a score of 1.0. The
score is then adjusted for similar reasons to those applying to qualitative scores.
In addition to the effects of location and repetition, the quantitative composite
impression management score varies depending on whether selectivity is measured in
respect of the quantitative amount. Similar to reinforcement of statements,
measurement of reinforcement of quantitative amounts is not feasible.
Table 5 summarises the weightings to be applied, and the resulting calculation of
quantitative composite impression management scores. Each quantitative amount
identified in the ARPR is given a weighting of 1.0. If the quantitative amount is
selected from a range of possible numbers in the profit and loss account, a weighting
is added depending on the ranking within the profit and loss account of the amount
If the quantitative amount is selected from the profit and loss account, it is ranked
depending on whether the amount selected is in the highest/medium/lowest category
of amounts from which selection can be made. A weighting of 1.0 is provided for
highest category; for the medium category the weighting is 0.5 times. The lowest
category attracts no weighting.
If the quantitative amount appears in the most-emphasised section of the ARPR a
weighting of one is added; for the next-most emphasised section a weighting of 0.5 is
added; the least-emphasised section attracts no weighting.
If the quantitative amount is accompanied by a performance comparison, an
additional weighting of 0.5 is added.
If the quantitative amount is repeated an additional weighting of 0.5 is added.
Applying these weightings, the resulting quantitative composite impression
management score will vary from a maximum of 4.0 to a minimum of 1.0. As with
keywords and statements, “positive” and “negative” numbers disclosed retain their +
and – descriptive tags.
Using composite impression management scores to measure bias
In addition to measuring impression management, the composite impression
management scores can relatively easily be extended to provide a measure of bias.
This measure captures the extent impression management is biased toward good news
/optimistic language/ tone. Thus, qualitative and quantitative composite impression
management scores could be further manipulated to capture a measurement for bias
inherent in impression management, resulting in a bias score. The bias score is an
index and comprises the difference between the total composite impression
management scores for all positive keywords/statements/quantitative amounts minus
the total composite impression management score for all negative
keywords/statements/quantitative amounts, divided by the total composite impression
management scores for all keywords/statements/quantitative amounts. The score can
be expressed as follows:
Score IM N - Score IM P
Where P IM Score = total positive impression management score for a press release
N IM Score = total negative impression management score for a press release
. (2008) compute a simple quantitative measure of language (in
newspaper articles) to investigate whether such measures have incremental
explanatory power for firms’ future earnings and stock returns. Their primary measure
to quantify the language used in financial newspapers is the fraction of negative
words in a news story. However, they also calculate other variations of the measure
based on the differences between positive and negative words divided by the total
positive and negative words in the newspaper article. Their method is similar to the
measure of bias proposed in this study.
The bias score/index is illustrated in Table 6. The impression management measures
for quantitative disclosures set out in Table 5 are applied in Table 6. For simplicity,
only quantitative disclosures are used and no repetition, selectivity or performance
comparison is assumed. The table assumes that seven positive quantitative amounts
and three negative quantitative amounts are disclosed in the press release. The
negative disclosures are located in the least-emphasised location in the press release,
while the positive disclosures appear throughout the press release. A bias score is
measured at +0.57. A score of zero means no bias, and a score of +1 mean complete
positive bias. A bias score of +0.57 suggests strong positive impression management
Table 5: Method for calculating quantitative composite impression management scores for amounts
(i) Disclosure of quantitative performance monetary and non-monetary amounts 1.0 1.0
(ii) Selectivity - highest/medium/lowest category of amounts from which selection can be made 1.0/0.5/0.0
(iii) Emphasis – Location: Most-, next-most, least-emphasised 1.0/0.5/0.0 1.0/0.5/0.0
(iv) Emphasis – Repetition 0.5 0.5
(v) Performance comparisons 0.5 0.5
Maximum possible composite score per quantitative amount 4.0 3.0
Minimum possible composite score per quantitative amount 1.0 1.0
Table 6: Calculating bias using quantitative disclosures
Assume the press release on which this example is based has disclosed seven positive quantitative amounts and three negative
quantitative amounts. Three positive quantitative amounts are located in the first paragraph (i.e., most-emphasised location) of the
press release. Two positive quantitative amounts are located in the middle of the press release (i.e., next-most-emphasised location),
while the remaining two positive quantitative amounts and the three negative quantitative amounts are in the last paragraph (i.e.,
least-emphasised location) of the press release. For simplicity, the press release contains no repetition of quantitative amounts, no
selectivity and includes no performance comparisons.
Number of quantitative disclosures 7 3 10
Composite impression management score
(1) Disclosure of quantitative performance monetary and non-monetary amounts 7 3 10
(2)(a) Emphasis – Location:
- Most 3 x 1 0 3
- Next-most 2 x 0.5 0 1
- Least-emphasised 2 x 0.0 3 x 0.0 0
(2)(b) Emphasis – Repetition 0 0 0
(3) Performance comparisons 0 0 0
(4) Selectivity - highest/medium/lowest category of amounts from which selection can be made 0 0 0
Total composite impression management score 11 3 14
Positive composite score
Negative composite score
Net positive composite score
Total composite score
= + 0.57
Key: +1 = completely positively biased; –1 = completely negatively biased; 0 = no bias
5. Summary and Conclusions
Having critiqued research on impression management methods in prior financial
reporting research, this paper developed and refined the measurement of four less-
researched impression management techniques and illustrated these with examples from
press releases. By investigating four impression management techniques in a single paper
the evidence is more complete than in prior studies.
Consistent with prior research findings, impression management in financial reporting
narrative disclosures is found, with multiple methods of exercising impression
management in evidence. Company managers have many and varied opportunities to
influence user impressions. While this research is not systematic, and therefore not
generalisable to a population, it nonetheless highlights for future researchers the
importance of considering multiple methodologies and more holistic approaches to
content analysis of narrative disclosures in pursuit of evidence of impression
Limitations of the research
This research is entirely focused on the supply-side, i.e., impression management
techniques used by management. The demand-side, the users’ perspective, is not
considered. The key question, does impression management matter, is not addressed. For
example, we do not know whether users are influenced by these techniques, we do not
know how users’ perceptions are changed by impression management, we do not know
whether users discount or disregard impression management in corporate
communications. Some limitations of our research methods have been mentioned earlier.
The 21 examples in the paper are drawn from UK press releases for the year 2000.
Although these examples are aging, we believe they are just as representative of
corporate practice now as in the year 2000.
The methodology in this paper recognises that in practice multiple impression
management methods are used simultaneously. Studying four impression management
methods simultaneously extends and improves on the prior literature. However, the
methodology does not include all seven impression management methods. There are
opportunities in the future for extending the methodology to encompass all seven
impression management methods.
Difficulties in achieving consistency of coding when analysing qualitative data with
linguistic subtleties have been referred to in Section 3. Moreover, the coding rules were
prepared and revised by one of the coders. In addition, although the coding rules were re-
written after coding differences between the two coders emerged, the re-written codes
should have been re-tested using additional coders to ensure the guidelines were clear.
Suggestions for future research
The methodology set out in this paper provides researchers with tools to examine
multiple impression management methods simultaneously. A question central to
impression management research is whether the use of impression management varies
depending on firm performance. Or in other words, is there evidence of biased financial
reporting, contrary to desirable qualities of good financial reporting as expressed in
conceptual frameworks for financial reporting? The development of a bias score to
measure bias arising from the use of impression management provides researchers with a
method to address this issue.
The development of a composite impression management score provides a tool for
comparative research. Composite impression management scores could be computed for
narrative reporting practices across firms, within the same firm over time, across industry
sectors, in different disclosure vehicles, and in different jurisdictions.
The use of press releases by business journalists is another avenue for enquiry. Do
journalists reproduce narrative disclosures word-for-word from press releases?
Comparisons of narrative disclosures in press releases with their reproduction in the
financial press, using methodologies described in this paper, has rich potential.
To conclude, the methods developed provide more rigorous measurement instruments to
enhance impression management research in the future to address the many un-
researched issues thereon.
The initial sample comprised all 123 Spanish listed companies (excluding foreign
companies and investment societies) on the Madrid Stock Exchange as of December
2000, matched with a sample of UK companies in terms of industry and size. ARPRs
were issued by 101 of the 123 UK companies in the initial sample.
The coding rules comprise the following: (1) Coding rules for second coder; (2)
Illustration of qualitative coding of a press release; (3) Illustration of quantitative coding
of a press release; (4) List of positive keywords used in the research; (5) List of negative
keywords used in the research. These documents are available from the authors on
A weakness of the methodology is that the coding rules were prepared and revised by
one of the coders. It would have been better to have stricter delineation (following
Krippendorff, 1980) between the guideline-setter and the coders to ensure validity of
Henry (2006) includes 6 positive words not in the word list in this paper: certain,
definitive, delivers, rewards, enjoy, beat. There are 12 negative words not included in the
word list: hurdle, obstacle, slump, uncertain, unsettled, risk, threat, penalty, drop, shrink,
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Appendix 1: Selection of amounts from the P&L account (Wolseley plc Annual Report
GROUP PROFIT & LOSS ACCOUNT – year ended 31 July 2000
Continuing operations 5,782.6 5,245.3
Acquisitions 429.7 -
Discontinued activities 191.1 259.7
6,403.4 5,505.0 Increase over
Costs less other income (6,030.2) (5,191.9) prior year
Trading profit before goodwill amortisation and exceptionals
Exceptional items -
Goodwill amortisation (12.5)
Continuing operations 338.1
Discounted activities 14.8
373.2 313.1 +19.2%
Loss on disposal of operations (42.6) (3.1)
Profit on ordinary activities before interest 330.6 310.0 +6.6%
Net interest payable (28.3) (3.6)
Profit on ordinary activities before tax 302.3 306.4 Decrease
Ordinary activities (114.4) (107.7)
Exceptional credit 6.0 0.7
Profit after tax 193.9 199.4 Decrease
Monitory interests (0.4) (0.5)
Profits for the year attributable to ordinary shareholders 193.5 198.9 Decrease
Dividends (88.3) (78.9)
Profits retained 105.2 120.0 Decrease
Earnings per share
Before goodwill amortisation and exceptionals
42.26p 38.08p +11%
Goodwill amortisation (2.17p) (0.96p)
Exceptionals (6.38p) (2.43p)
Basic earnings per share
33.71p 34.69p Decrease
Diluted earnings per share 33.67p 34.65p Decrease
: This amount was selected for inclusion in the press release
-: Numbers to identify the total possible profit/earnings per share amounts from which to select for disclosure in the
press release, ranked in order of size