Publication
Title
Management's performance justification and failure to meet earnings thresholds
Author
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.
Language
English
Source (journal)
Accounting and business research. - London, 1970, currens
Publication
London : 2015
ISSN
0001-4788
Volume/pages
45:6-7(2015), p. 841-868
ISI
000364484500008
Full text (Publisher's DOI)
Full text (open access)
Full text (publisher's version - intranet only)
UAntwerpen
Faculty/Department
Research group
Publication type
Subject
Affiliation
Publications with a UAntwerp address
External links
Web of Science
Record
Identification
Creation 23.11.2015
Last edited 10.07.2017
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