The development and application of text-focused methods for evaluating accounting narratives, with a view to investigating impression management
Sydserff, Robin Scott
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This study responds to a call in the literature for methodological and empirical studies to advance research into accounting narratives. The primary contribution is methodological, drawing on the literature of applied linguistics and that of managerial business communications, in developing for accounting applications three text-focused methods for evaluating accounting narratives. This expansion in the portfolio of approaches available to the accounting researcher offers the potential for a richer empirical analysis, demonstrated in this study through an illustrative empirical application. The methods are developed in light of acknowledged areas of weakness and gaps in the accounting literature and with a view to investigating impression management. A general line of critique in the accounting literature points to a lack of emphasis on the syntactic dimension, with a particular focus on the weaknesses of readability formulas as the dominant method of syntactic analysis. The particular orientation towards the investigation of impression management recognises the increasing importance in the literature of issues associated with impression management in accounting narratives. The aptitude of the methods developed for investigating impression management is demonstrated through an illustrative empirical application in tests of differentiation between `good performers' and `poor performers'. A texture index and a transitivity index go some way towards redressing the general lack of emphasis on the syntactic dimension, exhibited in the existing portfolio of approaches. The texture index is developed as an alternative to readability formulas, is response to the particular focus of critique. The texture index analyses text across a number of dimensions or indexicals and embodies a number of features, which render it attractive to accounting researchers. The transitivity index measures the number of passive constructions in a text, a textual dimension associated with causation and attribution, with a particular relevance to the investigation of impression management. The third approach outlined in this study is DICTION analysis, a computerised content analysis program, which examines a text for its verbal tone, measured across five variables: `certainty', `optimism', `activity', `realism' and `commonality'. This approach is selected principally because of its relevance and applicability to the investigation of impression management. The texture index is drawn from the applied linguistics literature. It has not previously been used in an accounting related application. The transitivity index and DICTION analysis are developed from the managerial business communications literature where both approaches have been applied, albeit to a limited extent, in accounting applications. Both of these approaches have a sound theoretical basis in linguistics. In developing these approaches from the managerial business communications literature, there are two main areas of contribution. First, the methods developed here have hitherto only been exploited to a limited extent in accounting applications. This study advocates the development of the methods in accounting related applications towards their full potential. Second, the methods are developed and adapted as appropriate with the expressed intention of investigating impression management in accounting narratives. In addition to the methodological contribution, the study also yields an empirical contribution through the empirical application. The study finds mixed results in relation to an investigation of differential reporting patterns in the Chairman's statement and `OFR type' Manager's report of `good performing' and `poor performing' investment trust companies. Extending the analysis beyond the traditional focus on the Chairman's statement to include the Manager's report, recognises the increasing importance of such `OFR type' documents and the relative lack of attention they have received hitherto from accounting researchers. The results are reported in light of a detailed synthesis of the empirical impression management literature that is included in this study. As far as the author is aware, this is the first detailed review of this nature in the literature. The study also finds mixed results in relation to differentiation between the Chairman's statement and Manager's report. Finally, the study fosters an ethos of interdisciplinarity between research communities in accounting and the communities of applied linguistics and managerial business communications. Such interdisciplinarity offers the accounting researcher insights and usable methods of analysis, developed in disciplines whose specialism is the evaluation of narrative.