Impression management: dual language reporting and voluntary disclosure

Abstract

The presentation of corporate disclosure may be explained by impression management. The relative extent of corporate disclosure may be related to information costs. This paper links these two theoretical perspectives by comparing the extent of voluntary disclosure in companies that have chosen to present a dual language approach to reporting, relative to the disclosure provided by companies choosing to report only in one language. The analysis shows that voluntary disclosure is higher in companies that have higher visibility through dual language reporting and whose investors face higher information costs. The analysis also shows that voluntary disclosure by companies reporting only in one language is associated with domestic visibility in market listing and type of industry, while that of companies reporting in two languages is associated with responding to market pressures.

Keywords:

• Impression management
• Dual language
• Voluntary disclosure
• Information costs

Notes

1 These 12 annual reports are included in the final sample which may cause some bias.

2 See Appendix A.

3 Cooke (1998) offers an alternative approach to rank regression, based on normal scores. Actual observations are transformed to the normal distribution following this method, referred to as van der Warden. This transformation is achieved by dividing the normal distribution into the number of observations plus one segment on the basis that each segment has equal probability.

4 Choice is based on mean square error (MSE) and adjusted R². The results of alternative regression equations are available from the first-named author.