Title
Management's performance justification and failure to meet earnings thresholds Management's performance justification and failure to meet earnings thresholds
Author
Faculty/Department
Faculty of Applied Economics
Publication type
article
Publication
London ,
Subject
Economics
Source (journal)
Accounting and business research. - London, 1970, currens
Volume/pages
45(2015) :6-7 , p. 841-868
ISSN
0001-4788
ISI
000364484500008
Carrier
E
Target language
English (eng)
Full text (Publishers DOI)
Affiliation
University of Antwerp
Abstract
We examine the intensity of management's performance justification as a remedial narrative impression management device, by investigating the association between behavioural earnings thresholds and causal language intensity on earnings-related outcomes in annual management commentary reports. Not meeting key earnings thresholds, such as positive earnings, positive earnings change and analyst earnings consensus, is argued to be a significant accountability predicament to which firms tend to respond with more intense use of causal language on performance in order to mitigate expected negative consequences of these events. Our results document a significant positive association between failure to meet earnings thresholds and causal language intensity. Moreover, we find that failure firms (not meeting earnings thresholds) tend to use more causal language in a weaker information environment. In addition, we document that firms that miss key earnings thresholds and use more causal language experience a less volatile abnormal stock return after the 10-K filing release. This study contributes to the impression management literature by evidencing incentives for the remedial use of causal language in management commentary.
E-info
https://repository.uantwerpen.be/docman/iruaauth/7e1723/128980.pdf
http://gateway.webofknowledge.com/gateway/Gateway.cgi?GWVersion=2&SrcApp=PARTNER_APP&SrcAuth=LinksAMR&KeyUT=WOS:000364484500008&DestLinkType=RelatedRecords&DestApp=ALL_WOS&UsrCustomerID=ef845e08c439e550330acc77c7d2d848
http://gateway.webofknowledge.com/gateway/Gateway.cgi?GWVersion=2&SrcApp=PARTNER_APP&SrcAuth=LinksAMR&KeyUT=WOS:000364484500008&DestLinkType=FullRecord&DestApp=ALL_WOS&UsrCustomerID=ef845e08c439e550330acc77c7d2d848
http://gateway.webofknowledge.com/gateway/Gateway.cgi?GWVersion=2&SrcApp=PARTNER_APP&SrcAuth=LinksAMR&KeyUT=WOS:000364484500008&DestLinkType=CitingArticles&DestApp=ALL_WOS&UsrCustomerID=ef845e08c439e550330acc77c7d2d848
Handle