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Publication

Accounting Narratives and Impression Management

2013-04, Brennan, Niamh, Merkl-Davies, Doris M.

This chapter focuses on impression management in accounting communication. Impression management entails the construction of an impression by organisations with the intention to appeal to their audiences, including shareholders, stakeholders, the general public, and the media. If successful, it undermines the quality of financial reporting and capital misallocations may result. What is more, wider social and political consequences include unwarranted support by non-financial stakeholders or by society at large. Impression management is examined by reference to four perspectives: the economic, psychological, sociological, and critical. These variously conceptualise impression management as reporting bias, self-serving bias, symbolic management, and ideological bias.

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Publication

Explaining Communication Choices during Equity Offerings: Market Timing or Impression Management?

2017-11, Hemmings, Danial R., Brennan, Niamh, Merkl-Davies, Doris M.

Opinions are divided on whether firms use corporate reports (1) to communicate with external parties in a clear and transparent manner (incremental information hypothesis), (2) to shape messages to suit their own agenda, or, worse still, (3) to mislead audiences (impression management hypothesis). Two competing hypotheses are considered in this chapter to explain why equity offerings coincide with stock overpricing. The dominant hypothesis to date – the market timing hypothesis – is that managers opportunistically time equity offerings to coincide with high stock prices. The empirical evidence supporting this hypothesis is ambiguous. The impression management hypothesis offers an alternative perspective. In this context, impression management entails the construction of an impression by organizations with the intention of influencing stockholders’ view of the firm as reflected in the stock price. Managers may engage in impression management, using persuasive language in pre-equity-offering communications (e.g., narrative disclosures), to drive up the stock price in advance of planned equity offerings.