Corporate governance and impression management in annual press releases
- Autores: Beatriz García Osma, Encarna Guillamón Saorín
- Localización: Working papers = Documentos de trabajo: Serie EC - (Instituto Valenciano de Investigaciones Económicas), Nº. 2, 2009
- Idioma: inglés
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Resumen
We study the association between corporate governance and impression management in annual results press releases (ARPRs). Press releases constitute a timely vehicle to communicate firm performance to third parties. However, oftentimes, managers provide self-serving disclosures that attempt to distort readers� perceptions of corporate achievements. Corporate governance mechanisms actively monitor managerial disclosures, improving firm transparency.
Thus, we predict that strong governance (i) increases firm voluntary release of ARPRs, and (ii) reduces impression management in those ARPRs. Tests are based on a sample of Spanish firms. The results confirm that strong governance firms are more likely to release an ARPR. In particular, board independence and the existence of remuneration and audit committees significantly determine this type of voluntary disclosure. We also show that strong governance limits impression management practices, consistent with governance monitoring effectively reducing self-serving disclosures by management. Our evidence is consistent with impression management being associated to firm news, suggesting that these practices respond, at least partly, to informative motivations.
