We examine the relation between earnings information content and the use of trust words, such as “character,” “ethics,” and “honest,” in the MD&A section of 10-K. We find that earnings announcements of firms using trust words have lower information content than earnings announcements of firms that do not use trust words. We also find that the value relevance of earnings is lower for firms using trust words than those not using trust words. Further, firms using trust words are more likely (...) to receive a comment letter from the SEC, pay higher audit fees, and have lower corporate social responsibility scores. Overall, our results suggest that firms that use trust words in the 10-K are associated with negative outcomes, and trust words are an inverse measure of trust. (shrink)

The objective of this study was to analyze the quality of climate information disclosed by companies and the impression management strategies they have developed to justify or conceal negative aspects of their performance. The study is based on a qualitative content analysis of the sustainability reports of 21 energy-sector companies that use the Global Reporting Initiative with A or A+ application levels over a period of 5 years. It contributes to the literature on climate disclosure by demonstrating the ineffectiveness of (...) the external assurance process in ensuring the quality and representativeness of the data. Significant non-compliance with GRI standards was identified in 86 of the 93 reports audited by a third party. In addition, six of the 21 companies surveyed were found to disclose increasingly opaque information over time, concealing information on the measurement and methodology used. Through this study, four impression management strategies were identified. These are employed either to justify certain information or to conceal it. In exposing the high incidence of non-compliance in GRI reporting and the use of impression management strategies by companies, this study shows that it will be difficult or impossible for stakeholders to reasonably assess, monitor and compare companies’ climate performance on the basis of these reports. (shrink)

Extant research has identified various effects of leader humor on subordinates and work groups. In contrast, less research has explored the influence of leader humor on leaders themselves and leaders’ subsequent behaviors. To address these issues, we drew from ego depletion theory and investigated when and how leader humor impacted leader workplace deviance. We argued that leader humor along with high impression management motive would bring increased ego depletion to leaders themselves and ultimately result in more leader workplace deviance. We (...) tested our theoretical model using a three-wave time-lagged field survey data collected from 103 leaders and 595 subordinates, as well as an experiment involving 487 leader participants, which provided overall support for our hypotheses. Our findings revealed the possible dark side of leader humor influencing both leaders themselves and organizations. Theoretical contributions and new avenues for future research are addressed. (shrink)

We ask what type of neutralization techniques corporations apply to allegations of human rights abuses. We proceed by undertaking a Qualitative Content Analysis of 162 responses by ten extractives-sector firms over a period of 14 years. The firms were responding to accusations of human rights impacts documented by the Business and Human Rights Resource Centre. We use Garrett et al.’s :507–520, 1989) framework of neutralization techniques consisting of denial, justification, concession and excuse to examine the responses. During our QCA, we (...) observed emerging themes around self-promotion and evasive tactics. We contribute to existing literature by proposing ‘evasion’ as a novel neutralization technique, particularly in circumstances of corporate responses to accusations of wrongdoing. We argue that evasion occurs when firms refuse to engage in the debate brought forward in an accusation. In addition, we enrich our understanding of neutralization techniques by proposing subneutralization techniques in our analysis to diverge from that of other studies. We conclude by discussing the implications of the predominance of corporate narcissism and evasive neutralization techniques to the business and human rights movement and other international corporate responsibility standards. (shrink)

This paper investigates whether and how the disclosure tone of earnings conference calls predicts future stock price crash risk. Using US public firms’ conference call transcripts from 2010 to 2015, we find that firms with less optimistic tone of year-end conference calls experience higher stock price crash risk in the following year. Additional analyses reveal that the predictive power of tone is more pronounced among firms with better information environment and lower managerial equity incentives, suggesting that extrinsic motivations for truthful (...) disclosure partially explain the predictive power of conference call tone. Our results shed light on the long-term information role of conference call tone by exploring the setting of extreme future downside risk, when managers have conflicting incentives either to unethically manipulate disclosure tone to hide bad news or to engage in ethical and truthful communication. (shrink)

This study expands the application of deonance theory into organizations’ upper echelons by examining how CEOs imprinted with a sense of duty can influence managerial decision-making. We hypothesize an imprint of bounded autonomy, an ought-force that constrains their decision-making and understanding of behavioral freedom, influences duty-bound CEOs to self-report errors in past financial reporting. We test deonance theory propositions of instrumentality for behavioral expansion, namely loss avoidance and gain attainment, related to institutional ownership concentration and CEO equity ownership. We use (...) CEOs that are graduates of U.S. service academies as a proxy for duty-bound executives and find firms they lead are more likely to issue a financial restatement to correct a previous reporting error. This finding is robust to alternate explanations such as being error-prone, earnings management, auditor oversight, and risk behaviors. We also find evidence that deonance may be subject to behavioral expansion. The likelihood of issuing a restatement decreases as institutional ownership concentration and CEO equity ownership increases. This study shows imprinted deonance within the C-suite influences important organizational outcomes. (shrink)

Symbols can be used to mask or embellish firms’ exploitative labor practices. The present study defines exploitative firms’ abuse of symbolic management using legitimate symbolic terminologies to embellish their demanding working conditions as symbolic framing and examines it in the Japanese context. Because of strong social criticism for exploitative practices, firms are under pressure to avoid giving an exploitative impression to stakeholders, particularly job seekers in recruitment. This study argues that exploitative firms respond to these pressures by embellishing their descriptions (...) of the hard-working conditions at the firm, using certain symbolic expressions. To test this argument, this study examined recruitment advertising of 1238 Japanese firms between 2006 and 2017 and analyzed their ideal candidate profile (ICP) statement—a description of personal attributes that align with the firms’ working conditions—based on topic modeling. The results showed that exploitative firms tend to frame their working conditions in the ICP statement as ‘challenging work,’ which acknowledges the demanding work environment but frames it positively. This tendency was strengthened for firms with younger employees. The results provide the current literature with new insights regarding the dark side of symbolic management. (shrink)

Achieving sustainability as a firm outcome is increasingly a concern for CEOs. Attention breadth (executive attention where attention is focused on a variety of areas simultaneously) is an important capability for CEOs to have in order to achieve sustainability performance at the firm level, as sustainability requires attending to multiple areas simultaneously including environmental, social, and governance dimensions as well as financial performance. To further explicate the development of attention breadth, I explore the two socio-cognitive antecedents of attention breadth—career experience (...) and social ties. Additionally, I examine the impact of CEO attention breadth on sustainability performance. A content analysis of letters to shareholders from a sample of Fortune 500 firms together with other archival data show an indirect influence of career experience and social ties on sustainability performance through the mediator of attention breadth. In particular, the number of social ties is shown to have more influence than career experience in determining the level of attention breadth, which I argue and show, ultimately leads to improved sustainability performance represented by a broader and more complex set of firm outcomes. The findings shed light on the antecedents of sustainability performance and expand the understanding of executive attention. (shrink)