Reporting practice, impression management and company performance: a longitudinal and comparative analysis of water leakage disclosure

Cooper, S.; Slack, R.

Abstract

This paper aims to determine whether corporate reporting practice, consistent with impression management, changes depending upon company performance. A longitudinal analysis, rarely used in prior impression management research, enables changes in annual report disclosures, both narrative and visual, to be identified and considered relative to a company's performance. Our analysis is based upon the disclosure of leakage performance, a strategic and stakeholder issue in the water industry, by all 10 water and sewerage companies (WASCs) in England and Wales over the 7-year period 2005–2006 to 2011–2012. Our longitudinal data are also compared across companies and contrasted with the expert counter account provided by the industry regulator, OFWAT. We find that the level, nature and presentation of a WASC's leakage disclosures change markedly reflective of their performance against OFWAT's target. Our evidence shows that the changes in reporting practice include the use of tactics and presentational methods consistent with impression management, raising concerns regarding the balance and trustworthiness of voluntary disclosures in the annual report. We suggest that the International Accounting Standards Board should further consider their guidance on narrative disclosures, including presentational format, to reduce the scope for impression management within corporate reporting.

Citation

Cooper, S., & Slack, R. (2015). Reporting practice, impression management and company performance: a longitudinal and comparative analysis of water leakage disclosure. Accounting and Business Research, 45(6-7), 801-840. https://doi.org/10.1080/00014788.2015.1081554

• Journal Article Type: Article
• Acceptance Date: Aug 6, 2015
• Online Publication Date: Nov 11, 2015
• Publication Date: Nov 11, 2015
• Deposit Date: Nov 17, 2015
• Publicly Available Date: May 11, 2017
• Journal: Accounting and Business Research
• Print ISSN: 0001-4788
• Electronic ISSN: 2159-4260
• Publisher: Taylor and Francis Group
• Peer Reviewed: Peer Reviewed
• Volume: 45
• Issue: 6-7
• Pages: 801-840
• DOI: https://doi.org/10.1080/00014788.2015.1081554
• Keywords: Reporting, Impression management, Performance, Leakage, Targets, Disclosure.
• Public URL: https://durham-repository.worktribe.com/output/1395544