Impression management in annual reports of the largest european companies

Publication, 2015


L. Falschlunger, C. Eisl, H. Losbichler, A. Greil - Impression management in annual reports of the largest european companies - Journal of Applied Accounting Research, Vol. 16, No. 3, 2015, pp. 383-399


Purpose: Graphs are powerful tools which affect a reader’s impression and decision making. However, graphs in annual reports have a long tradition of being designed in order to give a more favourable impression of the company’s performance. The main contribution of this research is thus it adds to our understanding of how large listed companies in Europe choose to use and misuse graphical representation. Design/methodology/approach: This comprehensive study investigates annual reports of the top 50 European companies listed in the fortune 500 index. Company reports are analysed over a period of 7 years resulting in 4,683 graphs. The authors investigate the development of the three major areas of impression management– selectivity, graphical measurement distortion and presentational enhancement – individually by company as well as collectively for the entire sample. Findings: The main findings are that topics displayed, and how they are presented, significantly change over time and that graphs are much more likely to exaggerate positive trends than to understate them. Additionally it can be found that longer time sequences (>5 years) almost exclusively depict favourable trends (86%) and graphical measurement distortions are applied on purpose for both KFV as well as for non-KFV (around 30% in all years). Originality/value: This study contributes to the research field of impression management by answering the quest for more longitudinal studies and offers an extended focus while examining not only KFV but all variables depicted in annual reports.