[Home ] [Archive]   [ فارسی ]  
:: Main :: About :: Current Issue :: Archive :: Search :: Submit :: Contact ::
:: Volume 4, Issue 8 (2-2020) ::
2020, 4(8): 33-62 Back to browse issues page
The Impact of Corporate Governance on Tone of Financial Reporting
Mohammad Pourkarim1, Saeid Jabbarzadeh Kangarlouei 2, Jamal Bahri Sales3, Hassan Galavandi4
1- Ph.D. Student in Accounting, Department of Accounting, Urmia Branch, Islamic Azad University, Urmia, Iran(pourkarimv@yahoo.com)
2- Associate Prof, Department of Accounting, Urmia Branch , Islamic Azad University, Urmia, Iran(Corresponding author), , s.jabbarzadeh@iaurmia.ac.ir
3- Associate Professor,Department of Accounting, Urmia Branch , Islamic Azad University, Urmia, Iran.(bahrisls.j@gmail.com)
4- Associate Prof, Department of Accounting, Urmia Branch , Islamic Azad University, Urmia, Iran (Galavandi@gmail.com)
Abstract:   (5001 Views)
The tone is characterized by the ratio of positive and negative words contained in the annual reports of the board of directors, which can be based on two Incremental Information  and opportunistic views. An Incremental Information view reduces information asymmetry, while an opportunistic perspective in the form of perceptual management is used to manipulate and distort user perceptions. Corporate governance acts as a mechanism for reducing the opportunism of managers.The purpose of this research is to examine the impact of corporate governance on Tone of financial reporting. In this research, to assess the corporate governance of the Topsis system, which consists of six criteria for the independence of the board of directors, management ownership, duality of the CEOchr('39')s duties, quality Audit, institutional ownership, and ownership concentration. The research sample which has been chosen by systematic elimination method is consists of 119 companies accepted in Tehran Stock Exchange for years 2010 to 2016. To test the research hypotheses, multivariate regression with panel data has been used. The results show that the stronger corporate governance is, it increases pessimistic tone. In other words the stronger corporate governance will prevent opportunistic managers who use tone in perception management
Keywords: Corporate Governance, Accounting Narratives, Pessimistic Tone of Financial Reporting.
Full-Text [PDF 266 kb]   (581 Downloads)    
Type of Study: Research | Subject: Special
Received: 2018/12/29 | Accepted: 2019/04/3 | Published: 2020/02/8
1. Aly, D., El-Halaby, Sh., and Hussainey, Kh. (2017). Tone disclosure and financial performance: evidence from Egypt. Accounting Research Journal, 31(1): 63-74.
2. Baginski, S. P., Hassell, J. M., and Kimbrough, M. D. (2004). Why do managers explain their earnings forecasts?. Journal of Accounting Research, 22(1): 1-29.
3. Brown, S., and Hillegeist, S. (2007). How Disclosure Quality Affects the Level of Information Asymmetry. Review of Accounting Studies, 12: 443-477.
4. Boudta, K., Thewissenc, J., & Torsinc, W. (2018). When does the tone of earnings press releases matter?. International Review of Financial Analysis, 57: 231-245.
5. Carlsson, S., and Lamti, R. (2015). Tone Management and Earnings Management. Master Thesis, Gothenburg: Gothenburg University.
6. Davis, A., and Tama-Sweet, I. (2012). Managers' Use of Language across Alternative Disclosure Outlets: Earnings Press Releases versus MD&A. Contemporary Accounting Research, 29(3): 804-837.
7. Davis, D. M., and Brennan, N. M. (2007). Discretionary disclosure strategies in corporate narratives: Incremental information or impression management?. Journal of Accounting Literature, 26: 116-195.
8. Davis, A. K., Piger, J. M., and Sedor, L. M. (2008). Beyond the numbers: Managers use of optimistic and pessimistic tone in earnings press releases. Working paper, University of Oregon.
9. Demers, E., and Vega, C. (2010). Soft Information in Earnings Announcement: News or Noise?. Working Paper, INSEAD, 2010/33/AC.
10. Feldman, R., Govindaraj, S., Livnat, J., and Segal, B. (2010). Managements Tone Change:ost Earnings Announcement Drift and Accruals. Review of Accounting Studies, 15(4): 915-953.
11. Fisher, R., Van Staden, C., and Richards, G. (2018). Tone and accounting narrative, available in: http://hdl.handle.net/10125/59356.
12. Hales, J., Kuang, X., and Venkataraman Sh. (2011). Who believes the hype? An experimental examination of how language affects investor judgments. Journal of Accounting Research, 40(1): 223-255.
13. Henry, E. (2006). Market Reaction to Verbal Components of Earnings Press Releases: Event Study Using a Predictive Algorithm. Journal of Emerging Technologies in Accounting, 3(1): 1-19.
14. Hooghiemstra, R. (2000). Corporate communication and impression management: New perspectives why companies engage in social reporting. Journal of Business Ethics, 27: 55-68.
15. Iatridis, G. E. (2016). Financial Reporting Language in Financial Statements: Does Pessimism Restrict the Potential for Managerial Opportunism?. International Review of Financial Analysis, 45: 1-40.
16. Lambert, R, Leuz, C., and Verrecchia, R. (2007). Accounting information, disclosure, and the cost of capital. Journal of Accounting Research, 45: 385-420.
17. Loughran, T., and McDonald, B. (2016). A survey Textual Analysis in Accounting and Finance. Journal of Accounting Research, 54(4): 1187-1230.
18. Riley, T. J. (2011). An Investigation into Managers Language Use in Earnings Press Releases. Phd Theses, Amherst: University of Massachusetts.
19. Riley, T. J, Semin, G. R., and Yen, A. C. (2014). Patterns of Language Use in Accounting Narratives and Their Impact on Investment Related Judgments and Decisions. Behavioral Research in Accounting, 1: 59-84.
20. Salvador de Souza, J. A., Rissatti, J. C., Rover, S., and Alonso Borba, J. (2019). The linguistic complexities of narrative accounting disclosure on financial statements: An analysis based on readability characteristics. Research in International Business and Finance, 48: 59-74.
21. Tetlock:. C., Saar-Tsechansky, M., and Macskassy, S. (2008). More than words: Quantifying language to measure firms’ fundamentals. Journal of finance, 63: 1437-1467.
Add your comments about this article
Your username or Email:


XML   Persian Abstract   Print

Download citation:
BibTeX | RIS | EndNote | Medlars | ProCite | Reference Manager | RefWorks
Send citation to:

Pourkarim M, Jabbarzadeh Kangarlouei S, Bahri Sales J, Galavandi H. The Impact of Corporate Governance on Tone of Financial Reporting. Valued and Behavioral Accountings Achievements. 2020; 4 (8) :33-62
URL: http://aapc.khu.ac.ir/article-1-571-en.html

Volume 4, Issue 8 (2-2020) Back to browse issues page
فصلنامه دستاوردهای حسابداری ارزشی و رفتاری Valued and Behavioral Accountings Achievements
Persian site map - English site map - Created in 3.13 seconds with 30 queries by YEKTAWEB 4258