Corporate Communication Coca Cola 2017

User Generated

xlyre410

Writing

MGMT 315

Description

Instructions: Your initial post should be at least 250 words. Please respond to at least 2 other students. Responses should be a minimum of 100 words and include direct questions.

We have looked at various ways of communicating through all areas of business. One of the most important ways that a corporation communicates with their investors is through their annual report. For this forum, I would like you to find an annual report and provide a review of that report for your initial response. Based on everything you have read both this week as well as previous weeks...was the point communicated effectively? Was the data presented in a way that was clear to the average person? Were you left with any unanswered questions?

Unformatted Attachment Preview

Student Replies Jonathon Classmates, I looked up a 2016 annual report on Texas Roadhouse from http://annualreports.com/. This report broke down all of the information I think would be asked by shareholders or anyone who had a form of investment within the organization. The document is shorter than I thought it would be (137 pages) for a business with a lot of moving pieces. The report is broken down into chapters that focus on shareholders, proposals, financial information, and statistical analysis data. I think that each section breaks down the information in a manner that is simple to understand to a person who might not have knowledge on technical terms or financial references. The beginning of the annual report introduces the reader to senior leadership and primary participants in annual corporate meetings. This information can guide individuals with questions to the appropriate person that can possibly solve the issue. There is no fluff writing throughout the report and focuses only on facts and quantifiable information. There are also previous years covered to show long term growth of the organization. Response to proposals are given with an answer to the issue and how the answer was determined with a course of action for moving forward. I think that it is important to give questions more than a yes or no answer so that investors truly understand the direction of the organization. Something that I would want a little more information on would be how the company plans to move forward based on the financial results from the previous year. I think the statement does a very good job with the financial statistics, but does not really focus on some basic numbers like adding restaurants. I have added the report as an attachment and highlighted information that I would want to know about if I was an investor within the company. Thank you J Texas Roadhouse.pdf Robert Hello Class, I figured for this week I would take a look back at the annual report I used in week two to see if I could shed some different insight on the report now that we have learned much more in class. The annual report I used was from Johnson & Johnson yes, the baby shampoo company. However, Jonson & Johnson is seen as a pharmaceutical company that makes over the counter products. The 2017-2018 annual report they published and developed in house, it is 124 pages long and broken down into four main categories with subcategories in each section. A huge compliment I have for their annual report is naming and giving a little bio of some of the shareholders. Also, there are little anecdotes like this along with the margins of the report “a culture of collaborative innovation has been the basis for every achievement, every step and leap forward since our inception as a company” (Corporate Report, n.d.). This one particular sentence lets the readers known that Johnson & Johnson's successes were because the company worked together as a whole to include cultural differences and diversity. The report also talks about how sharing of best practices and collaboration has helped increase their market in the eye care world on a domestic and global scale. Per the report, Johnson & Johnson seem to have a diverse workforce that is having success globally due to an increase in globalization and communication. Here is a quote to solidify my previous statement: “the success we achieve for patients, consumers, stakeholders, and shareholders would not be possible without the commitment of 134,000 diverse and talented J&J employees in sixty countries around the world” (Corporate Report, n.d.). The article is filled with anecdotes like this, and another section of the report sets positive expectations for the company for 2018-2019. The first time I read this report, I did not really understand the analytical data, but now after reading the article for a second time, I have a better grasp over the information. Think if you were the average person, the information might be a little confusing. However, if you work in the business, and are familiar with the contents of an annual report, there should be no problem dissecting the information. The annual report was so well written that employees and consumers would have no trouble understanding 90% of the article. The report was written in a way that it was professional enough for the stakeholder but simple enough for outsiders to understand what type of company J&J is. After reading how diverse the company and how including they are I had no questions whatsoever. The authors of this report drove home that J&J is a diverse company looking to improve people lives throughout the world. References Corporate Reports. (n.d.). Retrieved December 11, 2018, from https://www.jnj.com/aboutjnj/annual-reports The current issue and full text archive of this journal is available at www.emeraldinsight.com/1356-3289.htm The extent and patterns of multi-stakeholder communications in annual report letters The extent of multi-stakeholder communications Roger W. Hutt Received 5 September 2011 Revised 13 December 2011 Accepted 22 March 2012 Morrison School of Management & Agribusiness, Arizona State University, Mesa, Arizona, USA 323 Abstract Purpose – The purpose of this paper is to determine whether CEOs use multi-stakeholder communications in their annual report letters and to describe any patterns observed in those communications. Design/methodology/approach – Annual report letters of the ten largest US companies were examined using content and text analysis procedures. Findings – CEOs made little use of multi-stakeholder communications in their annual letters. Some variations were found among the sample companies’ letters, including differences in word counts, reading ease scores, and number of word types. Research limitations/implications – A small sample of companies and one medium of communication were used in carrying out the study. Increasing the sample size, the array of industries represented, and the variety of media may yield more robust results. Practical implications – Recommendations for communicating with a multi-stakeholder audience are proposed. Originality/value – The paper examines how stakeholders relate both to the organization and to one another, a focus not examined in great depth elsewhere in the literature. Keywords Annual reports, Chief executives, Corporate communication, Multi-stakeholder approach, Text analysis, Communication, Large enterprises, United States of America Paper type Research paper Introduction To understand a business is to understand the relationships with and among its stakeholders – - the groups having a stake in the activities making up the business (Freeman et al., 2007). Stakeholders can pave the way and make it easier to execute a strategy. They can also create resistance and make it difficult or impossible for the firm to realize its mission. Establishing communication with them is critical and is one of the CEOs major responsibilities. Stakeholders abound. It would be a rare firm, indeed, where only one relevant stakeholder group was identified. Identifying the target groups from among the many possibilities is an essential prelude to communication. One-way CEOs carry out this communication task is to address, specifically, the interests and needs of each individual stakeholder group. Another way, the multi-stakeholder approach, involves finding the commonalities in behaviors and interests among a complete set of stakeholders and then communicating to them as one audience. Customers, suppliers, employees, communities, and financiers – all those in Corporate Communications: An International Journal Vol. 17 No. 3, 2012 pp. 323-335 q Emerald Group Publishing Limited 1356-3289 DOI 10.1108/13563281211253557 CCIJ 17,3 324 the value creation process – would typically comprise that set. This study examines both of these ways of viewing and communicating with multiple stakeholders through annual report letters. Descriptions of stakeholder groups The corporation’s role as a social institution, with responsibilities extending beyond its shareholders to include other stakeholders, has been discussed in the management literature for decades (Davis, 1960; Drucker, 1946; Fassin, 2009; Johansen and Nielsen, 2011). In 1984, Freeman defined stakeholders as “any group or individual who can affect or is affected by the achievement of the organization’s objectives” (Freeman, 1984). The concept has evolved over the years and has attracted the attention of an increasingly larger set of interested parties and volumes have been written about it. Fassin (2009) reported that several academic journals have dedicated special editions to the stakeholder concept. On a similar note, Johansen and Nielsen (2011) pointed out that policymakers, regulators, non-governmental organizations (NGOs), and the media are paying more attention to stakeholders. Researchers have also noted the impact on the stakeholder concept of the social media, which not only allows stakeholders to express their opinions and build constituencies, but also shifts the center of communication from organizations to issues and topics (Luoma-aho and Vos, 2010). While proposing a rethinking of both stakeholder theory and ethical theory, Freeman and his co-authors offered the definition that “... stakeholders are moral agents as well as members of groups such as ‘customers,’ ‘communities,’ ‘shareholders’ etc... (Freeman et al., 2010). Also suggesting a refinement of the definition, Fassin (2009) proposed that stakeholder activities can be divided into three groups “...the stakeholder who holds a stake, the stake watcher who watches the stake, and the stake keeper who keeps the stake.” Some of the different ways of thinking about and describing stakeholders are normative classification when the extent of agreement is not considered, normative classification when the extent of agreement is not assumed, multiple roles, and the multi-stakeholder approach. Normative classification when the extent of agreement is not considered According to this classification method, people or other entities are categorized normatively into stakeholder groups and are separated from each other by neat, rigid boundaries. Employees, customers, suppliers, and communities and other groupings are common members. The classification scheme is useful to firms, particularly when trying to understand and describe how various constituencies (i.e. stakeholders) might react to a particular corporate initiative. A firm’s decision to use only recycled materials in the manufacturing process may delight environmentalists. The same decision might raise the ire of shareholders fearing reduced dividends. Normative classification when agreement is not assumed It is clear to some observers that normative assignment to a group is convenient but does not ensure that members agree on the pertinent issues. Investors, for example, may not agree with each other and different employees will have different needs. From the above example, just because they are environmentalists does not necessarily mean that all in that group will be as supportive of the initiative. People may not even know they are identified with a particular stakeholder group. Multiple-roles People and groups, depending on their roles, can occupy more than one stakeholder classification at the same time. Boundaries between groups have blurred, as corporate relationships with stakeholders have grown more complex (Goodman, 2006; McVea and Freeman, 2005). Employees might also be shareholders. In this role they might view a corporate cost-cutting proposal differently than shareholders who are not employees. Multi-stakeholder approach Communicating with multi-stakeholders is a matter of understanding what appeals to all relevant groups simultaneously. Attention is paid to the commonalities rather than the differences among a complete set of stakeholder groups. As Johansen and Nielsen (2011) pointed out, “...corporations should be aware of discursive practices and conventions within the various stakeholder groups they address.” Borrowing from nature, a school of fish bears enough of a resemblance to the more abstract multi-stakeholder concept that it’s a useful analogy. The common element, which is discussed further below, is that communication and action can occur quickly, without the impediment of a hierarchical structure. A complete set is a collection of readily-identifiable stakeholders involved in the entire value creation process (Freeman et al., 2007). At a minimum, customers, suppliers, employees, communities, and financiers are included. This set might be somewhat different in different organizations or at different times in an organization’s life cycle, but most likely only slightly different. Whatever the case, the organization’s commitment and communication must take the interests of all members of the complete set into consideration. The approach, resembling Adam Smith’s ideas of producing the greatest good for the greatest number, depends heavily on the connections and networks among the complete set (Freeman et al., 2007). Annual report letters The annual report letter, often called the shareholder letter, is generally written once a year and is included in the beginning of the corporation’s annual report. Written by one or more top executives, and providing a broad overview of the firm’s operations and basic financial results for the year, the letter also generally discusses its current position in the market, and some of its future plans (Bowman, 1984). The letter is not required, nor are there standards, or content requirements (Geppert and Lawrence, 2008). As Bowman (1984) observed, CEOs consider annual reports to be a major communication channel to reach many constituencies. An understanding of language and ideology are important in this process of written communication as noted by Fox and Fox (2004): Through the medium of writing a [corporate public discourse] CPD communicative event is given precision . . . writing gives both the producer (a corporation) of a CPD communicative event and the receiver (stakeholders) of a CPD communicative event an increased awareness of the social context of their interaction (relations of power), of the importance of a community of writers (the corporate management discourse community), and of an exclusive language of that community (CPD). The extent of multi-stakeholder communications 325 CCIJ 17,3 326 Annual report letters have become a multi-objective, multi-audience medium of corporate communication and could be considered elements of the mass media (Anderson and Imperia, 1992). They are often directed to large audiences as is the case of Procter and Gamble (see Table I) with more than two million stockholders. And they deliver their messages without personal contact or immediate feedback. Objectives include communicating the company’s philosophy and its personality; announcing new product introductions, executive appointments and resignations; justifying mergers and acquisitions; and reporting earnings, dividends, and new stock issues. Based on their study, Geppert and Lawrence (2008) suggest that executives use the letter as a tool of reputation management. Significant, high-profile topics, are typically introduced by the CEO in the letter accompanying the report, with further details included elsewhere in the report. Audiences include stockholders, for whom the report was originally intended, as well a variety of others including potential customers, prospective investors, and financial analysts to name just a few. Who actually wrote the letter can make a difference when examining them down to the level of the actual words used and their frequency. Are they written solely by the CEO, by the staff, or a combination of the two? Without answering the question directly, Bowman (1984) observed that CEOs typically provide the outline for the report’s contents followed by proofreading and changes. It is assumed in this study that the letters were written by CEOs. CEOs’ use of multi-stakeholder approaches in communicating is examined in this paper. Patterns discerned in the approaches will be noted. Research questions The contents of CEOs’ annual report letters for ten of the world’s largest corporations were analyzed. The specific research questions addressed were: RQ1. Do CEOs recognize more than one group of stakeholders in their annual report letters? RQ2. To what extent do CEOs use a multi-stakeholder approach in corporate communications? RQ3. What patterns, if any, are noticeable when CEOs communicate with more than one stakeholder group, but outside the parameters of the multi-stakeholder approach? Methodology The sample in the study, as shown in Table I, consisted of the ten largest US companies in 2009, ranked according to market value, publishing an annual report letter. Market value or capitalization is determined by multiplying the per share stock price by the number of shares of stock outstanding. Apple Inc., which would have ranked fifth, is not included in the sample because the company does not publish an annual report letter. IBM, which would have ranked eleventh, was added to round out the list. Table I also includes shareholder and employee numbers for each company. Berkshire Hathaway Inc. was included in the study because it is the fifth largest US firm based on market value. The company’s letter stands apart from the others in the sample. Written by Warren Buffett, it is one of the best-read, and most-quoted, and 167.01 to 308.77 Market value Range 179.69 Med 1,547 525,529 135,568 292,983 27,900 2,311,000 185,121 598,000 2,811 257,307 543,807 n 2,811 to 2,311,000 Shareholders Range 275,145 Med 45,300 80,700 89,000 2,100,000 222,000 127,000 115,500 304,900 19,835 284,000 437,776 n Med 174,500 Employees Range 19,835 to 2,100,000 Sources: Available at: www.forbes.com/lists (accessed January 11, 2011). Apple Inc., which would have ranked fifth, is not included on this list because it does not publish an annual report letter. IBM, which would have ranked eleventh, was added to round out the list. Available at: www.mergentonline.com (accessed January 11, 2011) 6.23 308.77 254.52 205.37 190.86 184.47 174.90 169.65 169.38 167.63 167.01 ExxonMobil Microsoft Wal-Mart Stores Berkshire Hathaway Procter & Gamble Johnson & Johnson General Electric Google Bank of America IBM Sample Whole foods ($bil) Company The extent of multi-stakeholder communications 327 Table I. Ten largest US companies in 2009, in market value, with an annual report letter CCIJ 17,3 328 most-anticipated documents each year. How popular is the letter? The banner across the top of the Business and Finance section of The Wall Street Journal included Buffett’s photo with the phrase “Online Today: Buffett’s Annual Letter at WSJ.com” (The Wall Street Journal, 2011). It is also the longest. Containing more than 10,000 words (see Table II), it is five times larger than the median. Buffett is known for his successful investing and his billionaire status. He is also known for his writing ability, a way of making ordinary people think they, too, could learn the investing principles he uses. Buffett’s letter attracts a following far beyond the shareholder ranks of the company. Whole Foods Market was the model against which sample companies were compared. Its selection was based on the company’s identification by R. Edward Freeman and his colleagues as “a prime example of this multi-stakeholder approach” (Freeman et al., 2007) and not because it was comparable on any significant measures. The company’s market value (see Table I) at $6.23 billion is considerably smaller than IBM’s, the smallest firm by that measure in the sample. With 45,300 employees and 1,547 shareholders, Whole Foods is smaller than all but one sample firm, Google, where the comparable numbers are 19,835 and 2,811 respectively. For RQ1 (Do CEOs recognize more than one group of stakeholders in their annual report letters?), content analysis was used to determine the presence of references to stakeholders and stakeholder groups by name within the annual report letters of the ten companies in the sample. The analysis was aided by AntConc (Anthony, 2007) text analysis software, which was used to scan the letters. The Keyword List feature of this tool shows which of a target document’s words are unusually frequent (or infrequent) in comparison with the words in a reference corpus. Comparisons were made between the ten target companies’ (that is, the sample companies) letters one at a time and Whole Foods Market’s letter, which was the reference corpus letter. Names of stakeholders and stakeholder groups comprised the resulting keyword list. Keywords were ordered according to Keyness, indicating statistical significance of their frequency in target files compared to the corpus. The statistical measure used to assess Keyness is log likelihood where G 2 is the value calculated. References to groups, organizations, and individuals reaching statistical significance at p , 0.01 or p , 0.05 are considered stakeholders (Hutt, 2010) for purposes of this study. To answer RQ2 (To what extent do CEOs use a multi-stakeholder approach in corporate communications?), stakeholders identified for the first research question for each company were compared to Freeman’s (2007) minimum list for a multi-stakeholder approach: customers, suppliers, employees, communities, and financiers. A company is considered to be using a multi-stakeholder approach if significant references to all stakeholders on the minimum list are identified in its letter. The Flesch Reading Ease measure was also used (Flesch, 2011). This measure was used by researchers in their recent study of the readability of mission statements of companies of approximately the size of those in the present study (Sattari et al., 2001). Flesch scores range from 0 to 100; the higher the number the easier the text is to read. College graduates should be able to understand text with scores from 0.0 to 30.0. Eighth- and ninth-graders find text easy to understand when scores are in the 60.0 to 70.0 range. For this study a ten-point range bracketing the Whole Foods, because it’s the model, score of 50.6 was used. Therefore, 45.6 to 55.6 were used as the standard range (neither difficult, nor easy) for purposes of the analysis. Readability formulas 50.6 819 1,277 1,275 1,013 586 1,085 40.3 45.4 65.1 54.4 40.6 4,8.55 2,652 740 55.4 51.7 22.3 to 65.1 406 721 529 n 38.6 22.3 64.1 Note: See Table III for the complete list a ExxonMobil Microsoft Wal-Mart Berkshire Hathaway Procter & Gamble Johnson & Johnson General Electric Google Bank of America IBM Sample companies Whole foods Companies Flesch Reading Ease n Range Med 406 to 2,652 876.5 Word types Range Med 2,078 3,832 4,797 3,232 1,521 3,112 10,866 2,187 859 1,984 1,181 859 to 10,866 2,132.5 Word count in letter n Range Med 39.4 33.3 26.6 31.3 38.5 34.9 24.4 33.8 47.3 36.3 44.8 24.4 to 47.3 34.4 Word types/word count (%) n Range Med 3 1 0 1 0 1 2 1 1 1 1 References to complete lista The extent of multi-stakeholder communications 329 Table II. Data from annual report letter analysis CCIJ 17,3 330 have flaws and must be used with caution (US Securities and Exchange Commission, 1998). The Flesch Reading Ease measure, in particular, is computed from a count of the numbers of syllables and words in a sentence and the number of sentences in a document yet it does not take into account the content of the text material itself. Word types offer another method of analysis within the context of multi-stakeholders. Each uniquely different or separate word according to AntConc is a word type. A generic message for a mass audience, it is assumed, would contain fewer word types while one directed to a narrowly-defined group might be filled with jargon and technical language; that is, contain many word types. Additional information can be gleaned from the data when combined with word counts to calculate word types as a percentage of word count, also in Table II. Geppert and Lawrence (2008) referred to this as the variety index, useful for determining the heterogeneity of wording in a text, when they compared the annual report letters of high corporate reputation firms with those of low corporate reputation firms. In addressing RQ3 (What patterns, if any, are noticeable when CEOs communicate with more than one stakeholder group, but outside the parameters of the multi-stakeholder approach?), a particular methodology was not employed. Results of the study will be viewed from an overall perspective and observations will be noted. Results and discussion Regarding RQ1 (Do CEOs recognize more than one group of stakeholders in their annual report letters?), analysis of the ten companies’ annual report letters found that some CEOs recognized more than one group of stakeholders as shown in Table III. Beyond merely acknowledging stakeholder groups, however, there is a need to address a complete set of stakeholders, readily identifiable, with a direct and vital interest in the firm’s value creation process. The purpose is to satisfy multiple stakeholders simultaneously rather than summing initiatives for individual stakeholder groups. Thus, finding commonalities for appealing to and communicating with multiple stakeholders is important. As shown in Table II, one company’s letter referred to two stakeholder groups in the complete set, seven referred to one of the set, and two made no references at all. Those references did not confirm a multi-stakeholder approach in their corporate communications. Table III. Stakeholders identified in sample Companies Stakeholders ExxonMobil Microsoft Wal-Mart Stores Berkshire Hathaway Procter & Gamble Johnson & Johnson General Electric Google Bank of America IBM Industry, shareholders Industry, companies, employees, students Associates Businesses, companies, industry Consumers Consumers Businesses, companies Users Clients, industry Clients, industry Note: Stakeholders identified were significant at p , 0.01 or p , 0.05. Stakeholder references in italics are a form of those found in the complete list With respect to RQ2 (To what extent do CEOs use a multi-stakeholder approach in corporate communications?), and as shown in Table II, annual report letters in the study exhibit some noticeable contrasts among the companies. Word counts ranged from 859 to 10,866, with a median of 2132.5 for the ten firms. A Kendall’s Tau ¼ -0.24 correlation statistic indicates a weak negative relationship between firm size and word count; that is, the larger the firm the fewer the words. Large ranges were also observed in other measures, such as 22.3 to 65.1 in Flesch Reading Ease scores. The spread in word types was from 406 to 2,652. Unlike any of those in the sample, the salutation of the Whole Foods Market’s 2009 annual report letter was “Dear Fellow Stakeholders.” Reading ease measures and word type counts provide additional ways of looking at the multi-stakeholder approach. They also help frame the discussion of commonalities as well. This study uses 45.6 to 55.6 on the Flesch scale as the standard range (neither difficult nor easy). The assumption is that text in that range would be read with ease, by the diverse group of stakeholders. Higher numbers indicate that the text is easier to read. A total of three companies were within that range as shown in Table III, while two were above and three were below. This may indicate that the annual report letters were not written with multi-stakeholders in mind. Again, the point is that the target audience is comprised of a diverse and complete set of stakeholders. If it’s too easy to read it may not be capable of addressing financial, technical, or related issues. If it’s too hard it may cause some readers to skip over important content. As shown in Table III, the number of word types ranges from 406 to 2,652.5, with a median of 876.5 words. Whole Foods Market’s letter contained 819 words. Whole Foods as the model is rated at 39.4 percent while the median for the sample is 34.4 percent. That comparison may suggest that the sample firm’s letters may contain too few word types for addressing multi-stakeholders. More variation among groups in terminology used could be expected given that a complete set consists of customers, suppliers, employees, communities, and financiers. Observations prompted by RQ3 (What patterns, if any, are noticeable when CEOs communicate with more than one stakeholder group, but outside the parameters of the multi-stakeholder approach?) highlight some of differences among sample members. A multi-stakeholder approach targets a complete or minimum set of stakeholders for communication. Does this describe CEOs? The present study looked at one medium of communication – annual report letters – and found that the answer is no. CEOs mentioned relatively few stakeholders to a level of significance in their letters. For example, for ExxonMobil the focus was on the industry and shareholders, for Procter & Gamble it was consumers, and for Wal-Mart it was associates (employees). Given that its large number of shareholders (more than a half-million) comprises a mass audience, it would be expected that ExxonMobil’s letter would be easy to read and relatively free of jargon. The company is also the largest in the country in market value, so it seems reasonable that communications would be read by a wide audience of prospective investors, and other interested parties. The letter, however, is difficult to read, the word count is low while the ratio of word types to words is high indicating the presence of jargon and technical language. Clearly, the letter was not written with a multi-stakeholder audience in mind. Procter & Gamble, with more than two million shareholders, publishes a letter that is easy to read and relatively free of jargon yet without a multi-stakeholder focus. Wal-Mart’s letter, which is one of the easiest to read in the sample, seemed to be speaking to and about its employees, with little attention The extent of multi-stakeholder communications 331 CCIJ 17,3 paid to other stakeholders. In other words, there is no evidence to date of the use of a multi-stakeholder approach in corporate communications. It should be noted, however, that this study’s focus on only one medium and the small sample are limitations. The possibility that CEOs are addressing stakeholder groups through other channels, such as social media, occasional mailings, or meetings, should be considered. 332 The multi-stakeholder approach and the school of fish Few scenes in nature are more serene than a school of fish in cool waters. Adults and children alike watch in amazement as dozens of individual fish move, en masse, as one organism, speeding up, slowing down and swimming together in any direction they seem to choose. How do they do it or why do they do it observers often ask. Researchers say this wonder of nature is made possible by a type of communication coming into play among the fish, especially when faced with opportunities or threats (Tu and Sayed, 2010). “Messages” are transmitted through the school, functioning as a network, to each individual fish. The movement of a single fish toward food or away from predators is the signal for adjacent fish to follow, and to follow immediately. Likewise, fish adjacent to those fish follow accordingly (Miller, 2010). Instantly, the entire school moves in a new direction, a process to be repeated again seconds later. It’s a network, not a hierarchy, and operates without a ‘boss fish’ that might actually slow the school’s reaction time. The “what’s good for one is good for all” behavior of the school is analogous to the desired behavior of multi-stakeholders when assembled into a complete set. Finding commonalities that appeal simultaneously to multiple stakeholders – consumers, suppliers, communities, employees, and financiers – is the key (Freeman et al., 2007). Value is created by guiding and coaching joint stakeholder interests into roughly the same direction. Corporations are finding ways of putting this network approach into practice and without involvement of the management hierarchy, which, as is true in a school of fish, could slow reaction time. It’s a decentralized group of self-directed individuals, acting on very localized information that can react very quickly to the environment. Like the fish in a school, each member of a complete set keeps an eye on the close-by member. The collective abilities of these individuals – none of which can see the big picture, contribute to the group’s success. In its published stakeholder philosophy, Whole Foods Market speaks to the commonalities among its stakeholders as, “Our goal is to balance the needs and desires of our customers, Team Members, shareholders, suppliers, communities and the environment while creating value for all. By growing the collective pie, we create larger slices for all of our stakeholders.” (Whole Foods Market, 2010). Similarly, a DuPont CEO stated, “We have traditionally identified four stakeholder groups important to DuPont – shareholders, customers, employees and society . . . that set provides us with an enduring template for identifying and engaging the people and groups who are vital to the continued success of our enterprise.” (Holliday, 2006). As a third example, Nestle describes its position as, “To create value for our shareholders and our company, we must create value for people in the countries where we are present. This includes the farmers who supply us, the employees who work for us, our consumers and the communities where we work” (Nestle, 2011). Implications Companies desiring to maintain communication with stakeholders in an environment of close and frequent communication may well consider a multi-stakeholder approach. The approach resembles a school of fish in that it operates as a network rather than as a hierarchy, thereby allowing communication and quick action among stakeholders. The appropriate annual report letter in this case should be focused on the broader audience relying on it for information and knowledge about the company. Mostly, this involves writing to consumers, suppliers, communities, employees, and financiers in the one letter, a departure from the practice of writing a letter presumably only for shareholders. Identification of the groups making up the target audience should be clear to the reader, as should be the reasons why each is included. It is recommended that a company desiring to implement a multi-stakeholder approach should: . articulate its values and principles, and what it stands for; . identify the long list of stakeholders; . narrow to a short list of those most directly related to the value creation process, realizing that it would be a relatively small yet complete set, and most likely including consumers, suppliers, communities, employees, and financiers; . confirm the commonalities in interests and behaviors among those on the short list; . ensure that the desires and needs of the complete are kept in balance while informing each stakeholder who the others are and their importance to the mission; . recognize that stakeholders are interdependent, with the flexibility to function without corporate oversight; and . use a variety of media, including social media, in company-to-stakeholder communication and facilitate stakeholder-to-stakeholder communication. Summary and conclusions Annual report letters have been described as a multi-audience medium of corporate communication. Evidence to support that claim, however, was not found in the present study. Even though the letters may have been widely-read, they appear to be directed to a narrowly-defined audience. A number of stakeholders were acknowledged, but in most cases only one was mentioned with significant frequency. The lack of recognition of more than one group also means that the study’s CEOs were not using the multi-stakeholder approach. This would have required finding commonalities in behaviors and interests among customers, suppliers, employees, communities, and financiers and then communicating to them as one audience. Clearly, something they were not doing. Two companies did not give significant recognition to any of the five stakeholder groups, and none of the companies recognized suppliers or communities. CEOs may have used the multi-stakeholder approach in conjunction with multiple channels of communication, and it’s possible that they did. However, that was not a focus of the study. A recommendation of the study is that annual report letters should be focused on the broader audience relying on it for information and knowledge about the company. Mostly, this involves writing to consumers, suppliers, communities, employees, and The extent of multi-stakeholder communications 333 CCIJ 17,3 334 financiers in the one letter. To be most effective, the writer should refer frequently to the individual groups while also acknowledging what they have in common. Future research on the topic should include the redesign and replication of this study to produce more robust results. The sample size should be increased, the number of different industries should be expanded, and communication channels should be added to the single medium (i.e. annual report letters) used in the present study. The firm’s growth, development, and changes in its environment are sure to impact its stakeholders. Finally, more needs to be known about how different stakeholder groups relate to each other as members of a complete set and how the complete set interacts with the company. A context, analogous to a school of fish, for thinking about the multi-stakeholder approach, was discussed and recommendations for implementing it were proposed. References Anderson, C. and Imperia, G. (1992), “The corporate annual report: a photo analysis of male and female portrayals”, The Journal of Business Communication, Vol. 29 No. 2, pp. 113-28. Anthony, L. (2007), AntConc 3.2.1w (Windows), available at: www.antlab.sci.waseda.ac.jp/ antconc_index.html (accessed November 15, 2010). Bowman, E. (1984), “Content analysis of annual reports for corporate strategy and risk”, Interfaces, Vol. 14 No. 3, pp. 61-71. Davis, K. (1960), “Can business afford to ignore its social responsibilities?”, California Management Review, Vol. 2 No. 3, pp. 70-6. Drucker, P. (1946), Concept of the Corporation, John Day and Co., New York, NY. Fassin, Y. (2009), “The stakeholder model refined”, Journal of Business Ethics, Vol. 84, pp. 113-35. Flesch (2011), The Flesch Reading Ease Readability Formula, available at: www. readabilityformulas.com/flesch-reading-ease-readability-formula.php (accessed February 24, 2011). Forbes (2011), The Global 2000, available at: www.forbes.com/lists (accessed January 11, 2010). Fox, R. and Fox, J. (2004), Organizational Discourse: A Language-Ideology-Power Perspective, Praeger Publishers, Westport, CT, p. 76. Freeman, R. (1984), Strategic Management: A Stakeholder Approach, Prentice Hall, Englewood Cliffs, NJ, p. 46. Freeman, R., Harrison, J. and Wicks, A. (2007), Managing for Stakeholders: Survival, Reputation, and Success, Yale University Press, New Haven, CT. Freeman, R., Harrison, J., Wicks, A., Parmar, B. and de Colle, S. (2010), Stakeholder Theory: The State of the Art, Cambridge University Press, Cambridge, p. 34. Geppert, J. and Lawrence, J. (2008), “Predicting firm reputation through content analysis of shareholders’ letter”, Corporate Reputation Review, Vol. 11 No. 4, pp. 285-307. Goodman, M. (2006), “Corporate communication practice and pedagogy at the dawn of the new millennium”, Corporate Communications: An International Journal, Vol. 11, pp. 196-213. Holliday, C.O. (2006), “Thought Leader Commentary”, in Freeman, R.E., Velamuri, S.R. and Moriarty, B. (Eds), Company Stakeholder Responsibility: A New Approach to CSR, Business Roundtable Institute for Corporate Ethics, Charlottesville, VA, pp. 12-15. Hutt, R. (2010), “Identifying and mapping stakeholders: an industry case study”, Corporate Communications: An International Journal, Vol. 15, pp. 181-91. Johansen, T. and Nielsen, A. (2011), “Strategic stakeholder dialogues: a discursive perspective on relationship building”, Corporate Communications: An International Journal, Vol. 16, pp. 204-17. Luoma-aho, V. and Vos, M. (2010), “Towards a more dynamic stakeholder model: acknowledging multiple issue arenas”, Corporate Communications: An International Journal, Vol. 15, pp. 315-31. McVea, J. and Freeman, R. (2005), “A names-and-faces approach to stakeholder management: how focusing on stakeholders as individuals can bring ethics and entrepreneurial strategy together”, Journal of Management Inquiry, Vol. 14, pp. 57-69. Mergent (2011), “Mergent online database”, available at: www.mergentonline.com (accessed January 11, 2011). Miller, N. (2010), “The dynamics of shoaling in zebrafish”, PhD thesis, University of Toronto, Toronto. Nestle (2011), Nestle Case Studies, available at: www.nestle.com/CSV/CreatingSharedValue CaseStudies/Pages/CaseStudy.aspx (accessed July 8, 2011). Sattari, S., Pitt, L. and Caruana, A. (2011), “How readable are mission statements? An exploratory study”, Corporate Communications: An International Journal, Vol. 16, pp. 282-92. Tu, S. and Sayed, A. (2010), “Foraging behavior of fish schools via diffusion adaptation”, paper presented at the Cognitive Information Processing (CIP), 2nd International Workshop, Elba, June 14-16, available at: http://ieeexplore.ieee.org/xpl/freeabs_all.jsp?arnumber¼ 5604109 (accessed August 22, 2011). US Securities and Exchange Commission (1998), A Plain English Handbook: How to Create Clear SEC Disclosure Documents, Government Printing Office, Washington, DC. (The) Wall Street Journal (2011), The Wall Street Journal, February 26-27, p. B1. Whole Foods Market (2010), Whole Foods Market 2010 Annual Report, available at: www. wholefoodsmarket.com/values/corevalues.php (accessed August 24, 2011). Corresponding author Roger W. Hutt can be contacted at: roger.hutt@asu.edu To purchase reprints of this article please e-mail: reprints@emeraldinsight.com Or visit our web site for further details: www.emeraldinsight.com/reprints The extent of multi-stakeholder communications 335 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. DEVELOP VIEWPOINT Gizelle Willows Clive Lotter The amazing shrinking annual report Obese annual reports hit the treadmill as the IASB and new reporting standards crack the whip. Self-insurance is often best A nnual reports are probably the most expensive publications ever produced that never get read. Each year, listed companies spend months preparing their glossy ‘flagship’ reports in a tedious process often called ‘the annual migraine’. Banks are notorious for their encyclopaedic annual reports, with the 2012 HSBC annual report running to 546 pages and the Royal Bank of Scotland’s shelf-bender at 543 pages. Until recent years our own ABSA was infamous for the size of its big red annual tome. How many shareholders have the time and interest to wade through all that? As a result annual reports - meant to enlighten – are just plain confusing, as investors get lost in a maze of company intricacies, pretty pictures and page after page of pie charts. A South African industrial giant recently published an annual report in which its environmental graphs had accidentally been placed with completely unrelated text. Although copies were distributed by the thousands, not a single reader, investor, analyst – or environmentalist - commented on the error. Which begs the question: besides the highlights, financials and possibly the CEO's statement, how much of the annual report is actually read? How many trees had met the axe before this truth dawned? In South Africa, the new Companies Act allows summarised financial statements, while the King III code encourages concise and plain reporting on just those issues most material to the business. The IRC of South Africa commissioned a research survey of the 2011 IR of the JSE top 100 companies. Professor Mervyn King noted that the average length of these reports was 179 pages, but for the 18 companies in the survey that published summarised rather than full financial statements, this total dropped to 124 pages. Summarised financials ranged from one page to 34 pages, averaging at 11 pages. This compares to the 70 page average for full financials, which now may be published on the company website. International pressure is also being brought to bear. In June 2013 Hans Hoogervorst, chairman of the International Accounting Standards Board (IASB), said that a new framework is needed to get rid of the multiple disclosures that submerge material financial information, saying: “The risk is that annual reports become simply compliance documents, rather than instruments of communication.” With the front-end narrative and back-end financials under pressure to trim down and shape up as useful investor and stakeholder tools, are we seeing the advent of the genuinely informative annual report? Reports for the real world that are 40 pages maximum, linked to detailed information on company websites, offering transparently analytical narrative with crisp infographics, complemented by digital versions optimised for screens and tablets? Then annual reports will no longer be much ado about nothing. ❐ 22 ACCOUNTANCY SA | October 2013 Don’t spend on unnecessary insurance and grow your own insurance fund investments. L et me start by saying that this piece is not about a stokvel. While the principles might be similar, I can’t say I have family and friends that I trust enough. However, if you do live in a community where you are able to pool resources, why not do so? Last month I encouraged you to insure only what you can’t afford to lose and to stop paying unnecessary insurance premiums on luxuries and immaterial items. If you’re bold enough to do so, keep track of how much you’re now saving every month by not paying these premiums anymore. What you should really be doing with that saving every month, is saving it! Which saving vehicle you choose is entirely up to you, but make sure you’re putting it away somewhere and keeping track of it. Let’s use a round number and say you’re now saving R500 a month, across all items you’ve chosen to stop insuring. At the end of one year you have saved R6 000, without interest. If you had lost your cellphone, you could replace it. At the end of two years, you would have R12 000. If you’ve invested it wisely, you could probably be past R13 000 at this point. If you lost your laptop, you could replace it. And so on and so on. Now Murphy would say that you’d lose your cellphone, your laptop and your watch within the first two months, but I’m saying the chances are slim. On the other hand though, theft is a real concern in our society for most of us, so you’d need to assess your own risk and weigh up the cost-benefit. The items I have mentioned are usually specific inclusions within household insurance, so you’d need to pay an additional amount to have them covered. Provided you don’t have a bout of insane bad luck, you’d probably do okay. And after ten years, you might even reach the point where you can just let your investment lie and work for you, without needing to add R500 every month. The alternative is being a slave to insurance premiums for the rest of your life, which, ten years from now, taking a 6% inflationary increase into account, would amount to a monthly payment of closer to R900. ❐ Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Volume 18, number 2, 2015 Accounting, Accountability & Performance What can we learn from the chairmen’s statements of Australian companies: a textual difference study Dr. Zilan Cen Xiamen University of Technology Dr. Rongchang Cai1 Xiamen University of Technology Abstract The purpose of this study is to contribute to research on impression management in corporate annual reports in an Australian context. A research question is investigated: do the most profitable Australian companies, assessed by percentage change in profit before tax, organise the chairmen’s statements of their corporate annual reports and disclose information in a way that is significantly different from the least profitable companies? The results of this study are indicative that impression management had occurred in chairmen’s statements of Australian corporations. Keywords: Australia, chairmen’s statements, impression management, narrative disclosure Corresponding Author: Dr Rongchang Cai, Xiamen University of Technology, 600 LiGong Rd, Xiamen, Fujian Province, China; Email: rongchang.cai@xmut.edu.cn 1 33 Accounting, Accountability & Performance Volume 18, number 2, 2015 Introduction Corporate annual reports are widely recognised as an important medium of communication between organisations and stakeholders (McQueen, 2001; Bartlett & Chandler, 1997; Healy & Palepu, 2001). Over the past decades, many researchers have worked to clarify the strategies adopted for preparation of those reports (e.g. Bettman & Weitz, 1983; Dierkes & Antal, 1986; Neu et al., 1998; Preston et al., 1996). Deliberately adopted strategies, which aim to portray a positive corporate image and control the impressions formed by outsiders of a company, are described as impression management (Leary & Kowalski, 1990). Researchers have been keen to learn about the application of impression management in organisational settings so as to facilitate more efficient capital allocation decisions. Much research to this effect has focused on corporate annual reports. This paper investigates the textual characteristics of chairmen’s statements published in corporate annual reports of the most and the least profitable Australian companies. Impression management Many studies explored the application of impression management in accounting narratives. Not only is the chairman’s statement the most widely read part of a corporate annual report (Courtis, 2004; Bartlett & Chandler, 1997), it is also likely to be the most reviewed section. Perhaps the most frequently used review strategy is content analysis. As an example of research of this kind, Smith and Taffler (2000) related selfpresentational narrative disclosures to future corporate solvency. They identified 33 failed companies, paired them with financially sound companies in the same period and performed both form (objective) and meaning (subjective) oriented content analysis. The results showed that it is possible to use the chairman’s statement alone to classify, with a high degree of accuracy, firms as likely to become bankrupt or financially viable in the future. However, as Smith and Taffler (2000) restricted analysis to the time period between 1978 and 1985, it is possible the findings may have limited external validity for current times. In another UK study, Clatworthy and Jones (2006) focused on the textual characteristics of information disclosed in the 1997 chairmen’s statements of the 50 top and bottom performing UK companies. Clatworthy and Jones identified a series of variables to measure the textual characteristics of the chairmen’s statements, including the total length of the statement, number of passive sentences used, number of personal pronouns employed, number of references to key financial indicators, number of quantitative references and the amount of discussion regarding the companies’ future. They found that unprofitable companies were more reluctant to give lengthy chairmen’s statements, focused less on key financial indicators, quantitative references or personal pronouns in their discretionary disclosures, but tended to use more passive sentences 34 Volume 18, number 2, 2015 Accounting, Accountability & Performance and included more discussion about the future. These results partially coincide with those from their 2003 study (Clatworthy & Jones, 2003). The readability of narratives is another area of study in impression management. Some academics working in the area have taken a macro view to focus on variations in the readability of corporate annual reports across multiple countries (Courtis, 1995; Jones, 1996; Courtis & Hassan, 2002). A common problem faced by research of this kind was the small sample size used, which resulted in a lack of generalisation power. Other researchers adopted a micro view where they tried to identify the determinants of obfuscation and clear communication through study of readability, usually within a particular region (Smith & Taffler, 1992; Courtis, 1998; Gist et al., 2004; Linsley & Lawrence, 2007). As Courtis purported, linking readability to other corporate elements such as performance, size and industrial classification was important to further explore the issue of obfuscation. Investigation into the presentation of financial figures has been a popular topic for scholars in business-related research as reflected in the earliest studies on impression management. Steinbart (1989) may be the earliest study in this area. He examined the auditor’s responsibility for the accurate use of graphs in corporate annual reports. The importance of research into impression management stems from several reasons. Firstly, impression management is a process that is initiated by one party (the report preparers) with an aim to influence the other party’s (the report users) perceptions and, in turn, their subsequent decisions. Consequently, the study of impression management can facilitate an understanding of certain decision-making patterns of report users. From a preparer’s standpoint, impression management research will help identify the presentation format that is the most favourable for the company, which should be addressed at the report designing phase. Secondly, it is important to know whether the subsequent decisions made by the report users as a result of reviewing the documents were severely distorted or misled. Studies can help provide this information. If an effect does exist, and it significantly violates widely accepted ethical practices as well as the financial market, legislation may need to be developed. Subsequently, the study of impression management can also benefit stakeholders at large. Thirdly, as more indepth studies of impression management are conducted, it is possible that some other reasonable disclosure strategies may be proposed or discovered. As in the development of accounting theory, where the research focus has shifted from normative theories in the 1960s to positive theories in the 1980s, a similar trend may be anticipated in the realm of behavioural accounting. 35 Accounting, Accountability & Performance Volume 18, number 2, 2015 Theories In business research, top-level managers (the report preparers) have been identified as acting opportunistically to maximise their personal benefits (Staw et al., 1983; Abrahamson & Amir, 1994). These findings are supported by the positive accounting theory (PAT). PAT assumes that individuals behave to advantage themselves. Every incident is driven by self-interest rather than for the good of society. Possibly the most widely applied theory among PAT is agency theory, which raises the concept of agency cost that occurs whenever there is an agency relationship (e.g. Fogarty et al., 2009). Such a relationship is an implication of the conflict of interests between owners and managers. Agency theory is based on the assumption that information asymmetry exists between different interest groups. It is this gap in knowledge that results in problematic performance only likely to be realised in the future, and it renders the opportunistic behaviours of managers unidentifiable at least in the short term. While the application of agency theory concentrates on poorly performing corporations, signalling theory, which was first proposed by Smith and Taffler (1992) and further discussed by Rutherford (2003), tends to focus on managers’ behaviours in positively performing companies. Managers in prosperous companies utilise impression management in such a way that they signal their superiority through greater transparency in their disclosure of information (Merkl-Davies & Brennan, 2007). Signalling theory has gained increasing attention in reputation management, where firms seek to signal their commitment to shareholders to create a better corporate image (Toms, 2002; Branco & Rodrigues, 2006). Signalling theory may be viewed as an extension of agency theory, because it is also based on the notion of personal interests, and it predicts that people take advantage of information asymmetry. As agency theory and signalling theory both work as the theoretical background for the realisation of self-interest through opportunistic behaviour, they are useful in explaining the managers’ motivation to carry out impression management as an ‘everyday occurrence’ (Merkl-Davies & Brennan, 2007, p. 125). In contrast, another focus of impression management is on the non-routine reporting context, where information not related to corporate financial performance is strategically disclosed. For instance, Deegan et al. (2000), Milne and Patten (2002) and O’Donovan (2002) considered pollution and environmental information. Ogden and Clarke (2005) investigated the disclosure strategies adopted by the privatised water industry in the UK. Instead of proposing agency theory, the authors of the latter four papers found that legitimacy theory underlies the strategic disclosures of this nature. Because the disclosure (or concealment) of financial achievements and quantitative statistics of chairmen’s statements are the main issues considered in this study, agency theory and signalling theory were applied to the theoretical framework of this study. 36 Volume 18, number 2, 2015 Accounting, Accountability & Performance Research question and methodology The ASX 500 index as at 30 June 2011 was used as a data source for the current study. The ASX 500 index contains information on the leading 500 listed companies and is available publicly. Profit margins after tax were used to differentiate between profitable and unprofitable companies. After identifying the best performing 50 companies and the worst performing 50 companies, an additional sample of 50 companies was randomly selected from the rest of the population of the ASX 500 index to comprise a third subgroup (a middle-range group). This group, together with the most and the least profitable group, were then analysed to find any significant differences proposed in the below hypotheses. The use of a middle-range sample aimed to strengthen the validity of the study by testing whether any trends found were continuous. Corporate annual reports were sourced from the Aspect Huntley Annual Reports Online Database (2011). To answer the initial research question of whether the reporting strategies of Australian listed companies differ significantly between the most and the least profitable companies, the following general null hypothesis was generated: H0: There is no systematic difference in the textual characteristics of information in the chairmen’s statements for the year ended 2010 between the most and the least profitable Australian companies. This general hypothesis was tested using a variety of measures, which required the development of six secondary null hypotheses. Based on the findings of Kohut and Segars (1992) and Clatworthy and Jones (2006), companies may provide narrative reports of different lengths according to their financial performance for the reporting year. Profitable companies tend to provide lengthier reports than unprofitable ones, because presumably they are more confident in discussing their past year’s operations. Therefore, the length of the report constitutes a means of evaluating impression management. However, apart from Godfrey et al. (2003) who investigated impression management surrounding CEO changes, very little evidence exists on the issue of impression management in relation to firm performance in Australia. To investigate this issue further, the following hypothesis is proposed: Ha: There is no significant difference in the length of chairmen’s statements in corporate annual reports between the most and the least profitable Australian companies for the year ended 2010. To test Ha, the length of the chairmen’s statements was measured by counting the number of words as well as number of pages of each document. 37 Accounting, Accountability & Performance Volume 18, number 2, 2015 Narratives of companies that experience poor financial performance tend to present in a style that distracts the reader away from this message (Thomas 1997). Some followup studies have further recognised that such rhetorical device works as a ‘proxy for obfuscation’ (Merkl-Davies & Brennan, 2007, p. 139; Pennebaker et al., 2003). The use of passive voice is one example; however, whether this is true in the Australian context needs to be examined: Hb: The chairmen’s statements in corporate annual reports of the most and the least profitable Australian companies will contain a similar percentage of passive sentences for the year ended 2010. The proportion of passive sentences in the chairmen’s statements was measured as a percentage of the total number of sentences. Another issue recognised by Thomas (1997) is that there tends to be a positive relationship between company performance and use of personal pronouns. This is not surprising because more profitable companies are motivated to organise their narratives in corporate annual reports in a way that engages readers to feel the success the corporation has attained. However, less profitable companies are more likely to divert the readers’ attention by making less use of the personal pronoun ‘we’. Further investigation of whether Thomas’s (1997) conclusion has generalisability is necessary. Therefore, a third hypothesis was developed for testing: Hc: The chairmen’s statements in corporate annual reports of the most and the least profitable Australian companies will contain a similar number of personal pronouns for the year ended 2010. As in the study by Clatworthy and Jones (2006), we counted the use of first person singular pronouns (i.e. I, me, my) and first person plural pronouns (i.e. we, us, our) in the chairmen’s statements. Some prior studies indicated that references to quantitative information including financial tables, trend graphs and general descriptions of market developments can also be used as means for impression management (e.g. Beattie & Jones, 1999; Arunachalam et al., 2002; Clatworthy & Jones, 2006). For the current study, quantitative information was defined as performance-related numbers, either in absolute or percentage form following the assumptions of Clatworthy and Jones (2006). This includes any reference to key financial indicators such as earnings per share (EPS), profit, sales and dividends. Hd: The chairmen’s statements in corporate annual reports of the most and the least profitable Australian companies will contain a similar number of references to key financial indicators for the year ended 2010. 38 Volume 18, number 2, 2015 Accounting, Accountability & Performance The number of references to key financial indicators was counted and recorded for each of the chairmen’s statements. To further explore the use of quantitative information in the chairmen’s statements in corporate annual reports of the most and the least profitable companies, another hypothesis, He, was developed. While Hd focuses on the number and type of key financial references employed within the chairmen’s statements, He is concerned about the overall frequency of monetary references within the chairmen’s statements. A closer look at the frequency might be an indicator of how willing firms were to disclose their performance. The references were counted in two categories: monetary and percentage. As predicted by Skinner (1994), profitable companies are more likely to use intuitive quantitative references than unprofitable ones. It is thus reasonable to make such a prediction here: He: The chairmen’s statements in corporate annual reports of the most and the least profitable Australian companies will contain a similar number of quantitative references for the year ended 2010. The number of quantitative references (monetary and percentage references) were counted and recorded for all chairmen’s statements. Another possible difference in discretionarily disclosed information lies in the level of emphasis companies put upon future development. This was first raised and examined by Kohut and Segars (1992). Since that time, numerous other studies have investigated the use of forward-looking information in chairmen’s statements of corporate annual reports. For instance, Aljifri and Hussainey (2007) found that the extent of information disclosure regarding the company’s future was correlated with corporate debt ratio; thus the following hypothesis is proposed: Hf: The chairmen’s statements in corporate annual reports of the most and the least profitable Australian companies will focus equally on the future for the year ended 2010. We examined the chairmen’s statements and recorded the number of references in relation to future prospects of the companies. Results and discussion Table 1 below presents descriptive financial statistics on the three sample groups. As expected, financial performance, in the form of percentage increase in profit after tax, differed significantly across the three groups for the fiscal year 2010. Therefore, the three sets of companies reported on markedly different performance backgrounds. It 39 Accounting, Accountability & Performance Volume 18, number 2, 2015 is also noticeable that companies with performance at each end of the spectrum had a smaller scale of market capitalisation on average ($1413m and $681m), whereas the middle range group had a significantly higher average market capitalisation ($2453m). Table 1: Descriptive statistics for the three groups of companies sampled Company No. Avg. Min. Max. ($m) Market Groups Profitability Profitability Profitability Capitalisation Most Profit. 50 728.59% 86.65% 12256.60% 1413 Random 50 3.35% -67.46% 80.07% 2453 Least Profit. 50 -289.78% -1776.54% -86.89% 681 Length of chairmen’s statements Table 2 presents descriptive statistics for the length of chairmen’s statements for the most profitable, least profitable and randomly selected companies. Both, the mean number of words and pages of the most profitable firms are higher than those of the least profitable firms (910 words and 817 words, and 1.8 pages and 1.58 pages respectively). The p values of the independent two-sample t-tests for the variable length are summarised in Table 3. Table 2: Descriptive statistics for the length of chairmen’s statements Most Profitable Least Profitable Random Length Length Length Length Length Length (Words) (Pages) (Words) (Pages) (Words) (Pages) Min. 345 1 330 1 254 1 Max. 2680 5 3216 6 3188 6 Mean 910 1.8 817 1.58 980 1.78 Std. dev. 500 0.97 502 0.91 513 0.97 Table 3: Significance-test results for Ha: Length Length Most profit. Most profit. Words Pages Least profit. Words Pages Random Words Least profit. .355 .244 Random .494 .918 .112 .290 It can be seen from Table 3 that no significant relationship was identifiable across the three groups relating to the length of the chairmen’s statements, and Ha is therefore supported. 40 Volume 18, number 2, 2015 Accounting, Accountability & Performance Use of passive voice Table 4 below presents the descriptive statistics for the percentage of passive sentences across the three groups of companies. While the mean result for the use of passive voice of the most profitable companies was 11.92 per cent, the figure for the least profitable companies was 15.90 per cent or roughly 33 per cent higher. The average percentage of passive sentences in the random group of companies was 11.58 per cent, the lowest of all three groups. Possible reasons for the discrepancies from the anticipated outcomes, and their statistical significance will be discussed in the next section. It is noteworthy that the overall percentage of passive sentences across the three categories was much lower than was found by Clatworthy and Jones (2006). Although the Clatworthy and Jones paper did not find any significant difference for the percentage of passive sentences in chairmen’s statements between the most and the least profitable companies, the results of this study reveal that significant differences do exist as Table 5 suggests. Thus, Hb is rejected. Table 4: Descriptive statistics for the percentage of passive sentences Most profit. Least profit. Random Mean Std.dev Mean Std.dev Mean Std.dev Passive sentences (%) 11.92 8.95 15.90 8.88 11.58 5.94 Table 5: Significance-test results for Hb: % Passiveness Passiveness Most profit. Least profit. Most profit. .028 Least profit. Random Random .823 .005 Note: Bold figures indicate significance identified under 0.05 level of confidence. Personal pronouns Table 6 below summarises the data for references to personal pronouns. Across the three categories, the use of the personal pronoun in the first person plural subjective case (i.e. we) is higher than that for the first person singular subjective case (i.e. I). Such a high usage of the plural personal pronoun signals an attempt to engage readers and make them feel they share some responsibility in the corporate success/failure. When the number of singular and plural pronouns was combined and compared across the three categories, the total number of personal pronouns used did not differ much for the three groups. On average, the most profitable companies employed 20.72 personal pronouns in the chairmen’s statements as opposed to 19.24 for the least profitable ones. However, the random companies again have demonstrated some distributional abnormality with only 17.48 incidences of personal pronouns. 41 Accounting, Accountability & Performance Volume 18, number 2, 2015 Table 6: Descriptive statistics for personal pronouns in chairmen’s statements Personal Most profit. Least profit. Random Pronouns (no.) Mean Std.dev Mean Std.dev Mean Std.dev First person singular I 2.74 1.93 3.12 2.68 3.14 2.10 Me 0.02 0.141 0.08 0.27 0.04 0.2 My 0.7 1.129 0.56 1.01 0.74 1.01 Total singular 3.46 N/A 3.76 N/A 3.92 N/A First person plural Our 10.24 10.20 8.20 7.49 7.90 7.32 Us 0.68 1.41 0.46 0.65 0.44 0.76 We 6.34 7.22 6.82 6.61 5.22 5.21 Total plural 17.26 N/A 15.48 N/A 13.56 N/A Total personal 20.72 N/A 19.24 N/A 17.48 N/A references No significant relationship was identified across the three groups (see Table 7 below). This outcome is inconsistent with that of Clatworthy and Jones (2006). In their study, the authors found the number of references to the pronoun ‘our’ was significantly different between the most and the least profitable firms, and that the most profitable companies were significantly more likely to use personal pronouns overall. However, the 10% level of confidence used in the 2006 study might be of concern to the reliability of the test results. Key financial references Table 8 below presents the descriptive statistics for references to key financial variables in the chairmen’s statements. Looking vertically, profit before tax was the least disclosed variable in all categories, despite its relative importance in valuing a company’s performance as recognised by Beattie and Jones (1992). However, it is interesting that profit after tax, which is directly derivable from profit before tax, was among the most disclosed variables regardless of the financial performance of the company. This result is inconsistent with the findings of the UK study (Clatworthy & Jones, 2006), where profit before tax was the most widely disclosed performance indicator and reference to profit after tax was not accounted for at all. Considering the fact that some South Pacific companies prefer using profit after tax to profit before tax as revealed in Warn (2005), such a discrepancy may derive from some cultural differences between the UK and Australia/New Zealand. Dividend is another 42 Volume 18, number 2, 2015 Accounting, Accountability & Performance variable that corporations are more willing to disclose in the chairmen’s statements of annual reports. This might be because the main target audiences of the statements are shareholders who are interested in their investment returns. This is also the case with Clatworthy and Jones’s (2006) study. Table 7: Significant-test results for Hc: personal pronouns Personal Most profit. Least profit. pronouns Most profit. I .417 Me .172 My .516 Our .257 Us .317 We .729 Total singular .609 Total plural .573 Total personal .652 reference Least profit. I Me My Our Us We Total singular Total plural Total personal reference Random I Me My Our Us We Total singular Total plural Total personal reference Random .323 .562 .852 .190 .291 .376 .406 .230 .308 .967 .405 .375 .840 .888 .182 .788 .449 .520 43 Volume 18, number 2, 2015 Accounting, Accountability & Performance Table 8: Descriptive statistics for references to key financial variables in chairmen’s statements Most profit. Year(s) None 10 & 09 Least profit. 2010 None 10 & 09 Random 2010 None 10 & 09 2010 No. % No. % No. % No. % No. % No. % No. % No. % No. % PBT 34 68 12 24 4 8 47 94 2 4 2 4 40 80 3 6 7 14 Sales 32 64 11 22 7 14 45 90 4 8 2 4 30 60 13 26 7 14 EPS 31 62 14 28 5 10 45 90 4 8 2 4 39 78 5 10 6 12 Divid. 17 34 20 40 13 26 33 66 10 20 8 16 26 52 10 20 14 28 PAT 19 38 24 48 7 14 35 70 8 16 8 16 21 42 18 36 11 22 As shown in Table 9 below, Hd could be rejected with confidence. Significant differences were present across all financial indicators in the chairmen’s statements of the most and the least profitable companies. Table 9: Significant-test results for Hd: key financial variable Key financial indicators Most profit. Least profit. Most profit. .001 Profit before tax .003 Sales .001 EPS .002 Dividend .000 Profit after tax Least profit. Profit before tax Random Sales EPS Dividend Profit after tax Profit before tax Sales EPS Dividend Profit after tax Random .042 .640 .032 .024 .382 .110 .001 .175 .314 .003 Quantitative references The descriptive statistics for quantitative references in chairmen’s statements for the period ended 2010 are summarised in Table 10. For the most profitable companies, the average number of monetary references was 8.36 per statement, while the average 44 Volume 18, number 2, 2015 Accounting, Accountability & Performance number of percentage references was much lower at 3.42 per statement. However, the large standard deviations suggest that the frequencies of quantitative references varied considerably in different chairmen’s statements. The same statistics for the random companies were lower than those of the most profitable companies in every respect, indicating fewer references to quantitative performance-related information. Overall, the frequencies of quantitative references in this study were lower than those of Clatworthy and Jones (2006). Such a systematic difference might again be attributable to nation-specific report-organising strategies. Table 10: Descriptive statistics for quantitative references in chairmen’s statements Most Profit. Least profit. Random Mean Std.dev Mean Std.dev Mean Std.dev Monetary 8.36 11.82 3.50 4.23 4.64 4.08 references (no.) Percentage 3.42 4.13 1.44 3.37 2.40 2.66 references (no.) The results in Table 11 below show that He was supported. However, analysis of the chairmen’s statements of the randomly selected companies shows that the quantity of monetary references was significantly different from both the most and least profitable companies. Table 11: Significant-test results for He: quantitative references Quantitative reference Most profit. Least profit. Most profit. Monetary ($) .173 Percentage (%) .117 Least profit. Monetary ($) Percentage (%) Random Monetary ($) Percentage (%) Random .038 .145 .007 .010 Emphasis on the future of the company Table 12 below reveals that the most profitable companies used approximately 68 words to describe their plans for the future in their chairmen’s statements. This number rose to 110 words for random companies and reached the highest level of 114 words per statement for the least profitable companies. The small standard deviation of the most profitable companies indicates that the data do not vary greatly within the group, whereas the much higher standard deviations for the other two categories (least profitable 72.30 and random 95.33) signal a much more scattered data distribution. The results displayed in Table 13 below do not support Hf. 45 Volume 18, number 2, 2015 Accounting, Accountability & Performance Table 12: Descriptive statistics for emphasis on the future in chairmen’s statements Most profit. Least profit. Random Mean Std.dev Mean Std.dev Mean Std.dev Future words (no.) 68.5 31.64 113.66 72.30 109.58 95.33 Table 13: Results of tests of significance for Hf: emphasis on the future Ref. to future Most profit. Least profit. Most profit. .000 Least profit. Random Random .005 .810 The test results for the current study are summarised in Table 14 below. The existence of the three rejected secondary hypotheses is powerful enough to show what was proposed in H0 does not always hold. In other words, there are only some systematic differences in the textual characteristics of information in the chairmen’s statements of the most and least profitable companies in Australia. Table 14: Summary of hypotheses testing Hypotheses Ha Hb Current study Support Reject Hc Support Hd Reject He Support Hf Reject Perhaps one of the most profound results of this study is the identification of the trend that as profitability increases, companies do tend to disclose more financial indicators to emphasise positive outcomes. By telling readers how positive the year has been through the disclosure of multiple performance indicators, chairmen are also signalling higher transparency in corporate information. This strategy thereby convinces the readers that there is a larger chance of getting rewarding outcomes by investing in those companies, because they get told expressly what is going on backstage and how their investments have been managed. Such a strategy of signalling all good news is a clear application of signalling theory. It appears that the reason why those companies with suboptimal performance chose not to disclose as much performance-related information was because they believed the company (or themselves if agency theory is assumed) would be disadvantaged if they did so. Such disadvantage may take the form of a decreased number of shareholders, reduced market capitalisation, damaged company reputation or, ultimately, diminished financial returns for management-level employees. The more unsatisfactory performance indicators were disclosed, the more the interests of the parties would be harmed. It also appears that the chairmen of those companies would rather sacrifice the stakeholders’ rights to know what has happened in exchange for 46 Volume 18, number 2, 2015 Accounting, Accountability & Performance more acceptable potential future returns. In other words, it is reasonable to assert that both agency theory and signalling theory can help explain the impression management efforts in chairmen’s statements. Conclusion The purpose of this study was to determine if textual differences in chairmen’s statements between the most and the least profitable Australian companies were apparent for the year ended 2010. In addition, the study investigated whether companies changed their information disclosure preferences as their performance levels vary. With three out of six hypotheses being rejected that related to the major research question, the null hypothesis that there is no systematic difference in the textual characteristics of information in the chairmen’s statements between the most and the least profitable companies was rejected. Although the results failed to reject all of the null hypotheses underlying the major research question, strong and consistent differences were demonstrated for Hb, Hd, and Hf. From a theoretical perspective, the significant test results have provided further evidence that information concealment or exaggeration does occur in chairmen’s statements of Australian companies, and that it is explainable by agency theory and signalling theory. This study highlights the ubiquitous trend of impression management in corporate annual reports, especially in the chairmen’s statements, which is the discretionary disclosure section. This study serves to encourage horizontal comparisons with other similar international studies such as Clatworthy and Jones (2006). Also, considering the timing of the related studies, this study also enables longitudinal comparisons which may provide some evidence of how trends in disclosure and application of impression management are developing in the discretionary section of corporate annual reports. Another contribution of this study is the introduction of a middle group for comparison purposes. Consider the study of Clatworthy and Jones and other studies of this kind, only samples at the two extremes of profitability were compared and analysed. Therefore, although such an analysis is more likely to lead to significant outcomes, there is no way to assess whether such a difference was a result of gradual changes that occurred systematically across the companies or whether it just happened randomly. By introducing the randomly selected middle group, this problem can be addressed. The results indicated that at least some variables exhibited clear trends along the profitability axis. However, in some other areas (i.e. He) it does look as though significant differences occurred in an unexpected way. 47 Accounting, Accountability & Performance Volume 18, number 2, 2015 Concerning the limitations, unlike Clatworthy and Jones’s (2006) approach where almost all UK registered companies were considered, the population of this study consisted of the ASX500 companies only. Thus the study results may not have enough representability to generalise to the wider ASX population especially to those companies with a smaller scale. Another possible restriction to generalisability is the time period for the data. In the current study, data were collected for only one year. However, what held in one period may not hold for another. Therefore, better generalisability could be achieved by taking a longitudinal study to expand the time period concerned. Finally, data for the selected samples were primarily sourced from the Aspect Huntley DatAnalysis and Aspect Huntley Annual Report Online Databases (2009). Full reliance has been placed upon the two databases. It was only assumed that the data collection methods, and therefore the data available in the databases were appropriate and rigorous—no investigation was carried out to test their reliability. To conclude, at least from this study, it was possible to infer instances where agency theory and signalling theory were in operation when Australian chairmen were writing their statements for corporate annual reports. References Abrahamson, E. and E. Amir (1994) ‘Concealment of Negative Organizational Outcomes: An Agency Theory Perspective’, Accounting and Business Research, No. 37, Vol. 5, pp. 1302 – 1334. Aljifri, H. and K. Hussainey (2007) ‘The Determinants of Forward-looking Information in Annual Reports of UAE Companies’, Managerial Auditing Journal, Vol. 22, No. 9, pp. 881 – 891. Arunachalam, V., Pei, B. and P. Steinbart (2002) ‘Impression Management with Graphs: Effects on Choices’, Journal of Information Systems, Vol. 16, No. 2, pp. 183 – 202. Bartlett, S. and R. Chandler (1997) ‘The Corporate Report and the Private Shareholder: Lee and Tweedie Twenty Years On’, British Accounting Review, Vol. 29, No. 3, pp. 245 – 261. Beattie, V. and M. Jones (1992) ‘The Use and Abuse of Graphs in Annual Reports: a Theoretical Framework and an Empirical Study’, Accounting and Business Research, Vol. 22, No. 88, pp. 291 – 303. Beattie, V. and M. Jones (1999) ‘Australian Financial Graphs: An Empirical Study’, Abacus, Vol. 35, No. 1, pp. 46 – 76. Bettman, J. and B. Weitz (1983) ‘Attributions in the Board Room: Casual Reasoning in Corporate Annual Reports’, Administrative Science Quarterly, Vol. 28, No. 2, pp.165 – 183. Branco, M. C. and L. L. Rodrigues (2006) ‘Corporate Social Responsibility and Resource-based Perspectives’, Journal of Business Ethics, Vol. 69, pp. 111 – 132. Clatworthy, M. and M. Jones (2003) ‘Financial Reporting of Good and Bad News: Evidence from Accounting Narratives’, Accounting and Business Research, Vol. 33, No.3, pp.171 – 185. 48 Volume 18, number 2, 2015 Accounting, Accountability & Performance Clatworthy, M. and M. Jones (2006) ‘Differential Patterns of Textual Characteristics and Company Performance in the Chairman’s Statement’, Accounting, Auditing and Accountability Journal, Vol. 19, No. 4, pp. 493 – 511. Courtis, J. K. (1995) ‘Readability of Annual Reports: Western Versus Asian Evidence’, Accounting, Auditing and Accountability Journal, Vol. 8, No. 2, pp. 4 – 17. Courtis, J. K. (1998) ‘Annual Report Readability Variability: Tests of the Obfuscation Hypothesis’, Accounting, Auditing and Accountability Journal, Vol. 11, No. 4, pp. 459 – 471. Courtis, J. K. and S. Hassan (2002) ‘Reading Ease of Bilingual Annual Reports’, The Journal of Business Communication, Vol. 39, No. 4, pp. 394 – 413. Courtis, J. K. (2004) ‘Corporate Report Obfuscation: Artefact or Phenomenon?’, British Accounting Review, Vol. 36, No. 3, pp. 291 – 312. Deegan, C., Rankin, M. and P. Voght (2000) ‘Firm’s Disclosure Reactions to Major Social Incidents: Australian Evidence’, Accounting Forum, Vol. 24, No. 1, pp. 101 – 130. Dierkes, M. and B. Antal (1986) ‘Whither Corporate Social Reporting? Is it Time to Legislate?’, California Management Review, Vol. 28, No. 3, pp.106 – 121. Fogarty, T., Magnan, M. L., Markarian, G. and S. Bohdjalian (2009) ‘Inside Agency: The Rise and Fall of Nortel’, Journal of Business Ethics, Vol. 84, No. 1, pp. 165 – 187. Gist, W. E., McClain, G. and T. Shastri (2004) ‘User Versus Auditor Perceptions of the Auditor’s Report on Internal Control: Readability, Reliability and Auditor Legal Liability’, American Business Review, Vol. 22, No. 2, pp. 117 – 130. Godfrey, J., Mather, P. and A. Ramsay (2003) ‘Earnings and Impression Management in Annual Reports: The Case of CEO Changes’, Abacus, Vol. 39, No. 1, 95 – 123. Healy, P. and K. Palepu (2001) ‘Information Asymmetry, Corporate Disclosure, and the Capital Markets: A Review of the Empirical Disclosure Literature’, Journal of Accounting and Economics, Vol. 31, No. 1 – 3, pp. 405 – 440. Jones, M. (1996) ‘Readability of Annual Reports: Western Versus Asian Evidence – a Comment to Contextualize’, Accounting, Auditing and Accountability Journal, Vol. 9. No. 2, pp. 86 – 104. Kohut, G. and A. Segars (1992) ‘The President’s Letter to Stockholders: An Examination of Corporate Communication Strategy’, Journal of Business Communication, Vol. 29, No. 1, pp. 7 – 21. Leary, M. and R. Kowalski (1990) ‘Impression Management: A Literature Review and Two-component Model’, Psychological Bulletin, Vol. 107, No. 1, pp. 34 – 47. Linsley, P. M. and M. J. Lawrence (2007) ‘Risk Reporting by the Largest UK Companies: Readability and Lack of Obfuscation’, Accounting, Auditing and Accountability Journal, Vol. 20, No. 4, pp. 620 – 641. McQueen, R. (2001) ‘The Corporate Image: the Regulation of Annual Reports in Australia’, Macquarie Law Journal, Vol. 1, No. 1, pp. 93 – 128. Merkl-Davis, D. and N. Brennan (2007) ‘Discretionary Disclosure Strategies in Corporate Narratives: Incremental Information or Impression Management?’, Journal of Accounting Literature, Vol. 26, pp. 116 – 194. Milne, M. and D. Patten (2002) ‘Securing Organizational Legitimacy: An Experimental Decision Case Examining the Impact of Environmental Disclosures’, Accounting, Auditing and Accountability Journal, Vol. 15, No. 3, pp. 372 – 405. 49 Accounting, Accountability & Performance Volume 18, number 2, 2015 Neu, D., Warsame, H. and K. Pedwell (1998) ‘Managing Public Impressions: Environmental Disclosures in Annual Reports’, Accounting, Organizations and Society, Vol. 17, pp. 645 – 665. O’Donovan, G. (2002) ‘Environmental Disclosures in the Annual Report’, Accounting, Auditing and Accountability Journal, Vol. 15, No. 3, pp. 344 – 371. Ogden, S. and J. Clarke (2005) ‘Customer Disclosures, Impression Management and the Construction of Legitimacy: Corporate Reports in the UK Privatised Water Industry’, Accounting, Auditing and Accountability Journal, Vol. 18, No. 3, pp. 313 – 345. Pennebaker, J. W., Mehl, M. R. and K. Niederhoffer (2003) ‘Psychological Aspects of Natural Language Use: Our Words, Our Selves’, Annual Review of Psychology, Vol. 54, pp. 547 – 577. Preston, A., Wright, C. and J. Young (1996) ‘Imaging Annual Reports’, Accounting, Organizations and Society, Vol. 21, No. 1, pp. 113 – 137. Rutherford, B. A. (2003) ‘Obfuscation, Textual Complexity and the Role of Regulated Narrative Accounting Disclosure in Corporate Governance’, Journal of Management and Governance, Vol. 7, pp. 187 – 210. Skinner, D. (1994) ‘Why Firms Voluntarily Disclose Bad News’, Journal of Accounting Research, Vol. 32, No. 1, pp. 38 – 60. Smith, M. and R. Taffler (1992) ‘The Chairman’s Report and Corporate Financial Performance’, Accounting and Finance, Vol. 32, pp. 75 – 90. Smith, M. and R. Taffler (2000) ‘The Chairman’s Statement: A Content Analysis of Discretionary Narrative Disclosure’, Accounting, Auditing and Accountability Journal, Vol. 13, No. 5, pp. 624 – 646. Staw, B., McKechnie, P. and S. Puffer (1983) ‘The Justification of Organizational Performance’, Administrative Science Quarterly, Vol. 28, pp. 582 – 600. Steinbart, P. J. (1989) ‘The Auditor’s Responsibility for the Accuracy of Graphs in Annual Reports: Some Evidence of the Need for Additional Guidelines’, Accounting Horizons, Vol. 3, No. 4, pp. 60 – 70. Thomas, J. (1997) ‘Discourse in the Marketplace: The Making of Meaning in Annual Reports’, The Journal of Business Communication, Vol. 34, No. 1, pp. 47 – 66. Toms, J. S. (2002) ‘Firm Resources, Quality Signals, and the Determinants of Corporate Environmental Reputation: Some UK Evidence’, British Accounting Review, Vol. 34, pp. 257 – 282. Warn, J. (2005) ‘Intangibles in Commercialisation: The Case of Air Navigation Services in the South Pacific’, Journal of Intellectual Capital, Vol. 6, No. 1, pp. 72 – 88. 50 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. [Your Business Name] Balance Sheet [Mmmm Dd, 200X] Assets Current Assets: Cash Accounts Receivable Less: Reserve for Bad Debts Merchandise Inventory Prepaid Expenses Notes Receivable Total Current Assets $0 $0 0 0 0 0 0 $0 Fixed Assets: Vehicles Less: Accumulated Depreciation 0 0 0 Furniture and Fixtures Less: Accumulated Depreciation 0 0 0 Equipment Less: Accumulated Depreciation 0 0 0 Buildings Less: Accumulated Depreciation 0 0 0 Land 0 Total Fixed Assets 0 Other Assets: Goodwill Total Other Assets 0 0 Total Assets $0 Liabilities and Capital Current Liabilities: Accounts Payable Sales Taxes Payable Payroll Taxes Payable Accrued Wages Payable Unearned Revenues Short-Term Notes Payable Short-Term Bank Loan Payable Total Current Liabilities $0 0 0 0 0 0 0 $0 Long-Term Liabilities: Page 1 [Your Business Name] Balance Sheet [Mmmm Dd, 200X] Long-Term Notes Payable Mortgage Payable Total Long-Term Liabilities 0 0 0 Total Liabilities 0 Capital: Owner's Equity Net Profit 0 0 Total Capital 0 Total Liabilities and Capital $0 Page 2 Page 3 Page 4 The current issue and full text archive of this journal is available at www.emeraldinsight.com/1356-3289.htm The extent and patterns of multi-stakeholder communications in annual report letters The extent of multi-stakeholder communications Roger W. Hutt Received 5 September 2011 Revised 13 December 2011 Accepted 22 March 2012 Morrison School of Management & Agribusiness, Arizona State University, Mesa, Arizona, USA 323 Abstract Purpose – The purpose of this paper is to determine whether CEOs use multi-stakeholder communications in their annual report letters and to describe any patterns observed in those communications. Design/methodology/approach – Annual report letters of the ten largest US companies were examined using content and text analysis procedures. Findings – CEOs made little use of multi-stakeholder communications in their annual letters. Some variations were found among the sample companies’ letters, including differences in word counts, reading ease scores, and number of word types. Research limitations/implications – A small sample of companies and one medium of communication were used in carrying out the study. Increasing the sample size, the array of industries represented, and the variety of media may yield more robust results. Practical implications – Recommendations for communicating with a multi-stakeholder audience are proposed. Originality/value – The paper examines how stakeholders relate both to the organization and to one another, a focus not examined in great depth elsewhere in the literature. Keywords Annual reports, Chief executives, Corporate communication, Multi-stakeholder approach, Text analysis, Communication, Large enterprises, United States of America Paper type Research paper Introduction To understand a business is to understand the relationships with and among its stakeholders – - the groups having a stake in the activities making up the business (Freeman et al., 2007). Stakeholders can pave the way and make it easier to execute a strategy. They can also create resistance and make it difficult or impossible for the firm to realize its mission. Establishing communication with them is critical and is one of the CEOs major responsibilities. Stakeholders abound. It would be a rare firm, indeed, where only one relevant stakeholder group was identified. Identifying the target groups from among the many possibilities is an essential prelude to communication. One-way CEOs carry out this communication task is to address, specifically, the interests and needs of each individual stakeholder group. Another way, the multi-stakeholder approach, involves finding the commonalities in behaviors and interests among a complete set of stakeholders and then communicating to them as one audience. Customers, suppliers, employees, communities, and financiers – all those in Corporate Communications: An International Journal Vol. 17 No. 3, 2012 pp. 323-335 q Emerald Group Publishing Limited 1356-3289 DOI 10.1108/13563281211253557 CCIJ 17,3 324 the value creation process – would typically comprise that set. This study examines both of these ways of viewing and communicating with multiple stakeholders through annual report letters. Descriptions of stakeholder groups The corporation’s role as a social institution, with responsibilities extending beyond its shareholders to include other stakeholders, has been discussed in the management literature for decades (Davis, 1960; Drucker, 1946; Fassin, 2009; Johansen and Nielsen, 2011). In 1984, Freeman defined stakeholders as “any group or individual who can affect or is affected by the achievement of the organization’s objectives” (Freeman, 1984). The concept has evolved over the years and has attracted the attention of an increasingly larger set of interested parties and volumes have been written about it. Fassin (2009) reported that several academic journals have dedicated special editions to the stakeholder concept. On a similar note, Johansen and Nielsen (2011) pointed out that policymakers, regulators, non-governmental organizations (NGOs), and the media are paying more attention to stakeholders. Researchers have also noted the impact on the stakeholder concept of the social media, which not only allows stakeholders to express their opinions and build constituencies, but also shifts the center of communication from organizations to issues and topics (Luoma-aho and Vos, 2010). While proposing a rethinking of both stakeholder theory and ethical theory, Freeman and his co-authors offered the definition that “... stakeholders are moral agents as well as members of groups such as ‘customers,’ ‘communities,’ ‘shareholders’ etc... (Freeman et al., 2010). Also suggesting a refinement of the definition, Fassin (2009) proposed that stakeholder activities can be divided into three groups “...the stakeholder who holds a stake, the stake watcher who watches the stake, and the stake keeper who keeps the stake.” Some of the different ways of thinking about and describing stakeholders are normative classification when the extent of agreement is not considered, normative classification when the extent of agreement is not assumed, multiple roles, and the multi-stakeholder approach. Normative classification when the extent of agreement is not considered According to this classification method, people or other entities are categorized normatively into stakeholder groups and are separated from each other by neat, rigid boundaries. Employees, customers, suppliers, and communities and other groupings are common members. The classification scheme is useful to firms, particularly when trying to understand and describe how various constituencies (i.e. stakeholders) might react to a particular corporate initiative. A firm’s decision to use only recycled materials in the manufacturing process may delight environmentalists. The same decision might raise the ire of shareholders fearing reduced dividends. Normative classification when agreement is not assumed It is clear to some observers that normative assignment to a group is convenient but does not ensure that members agree on the pertinent issues. Investors, for example, may not agree with each other and different employees will have different needs. From the above example, just because they are environmentalists does not necessarily mean that all in that group will be as supportive of the initiative. People may not even know they are identified with a particular stakeholder group. Multiple-roles People and groups, depending on their roles, can occupy more than one stakeholder clas...
Purchase answer to see full attachment
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer

Attached.

Running head: CORPORATE COMMUNICATION

Corporate Communication
Student’s Name
Institution
Date

1

CORPORATE COMMUNICATION

2

Corporate Communication- Coca-Cola 2017 Annual Review
Coca-Cola is one of the leading beverage companies across the globe, and that formed
my interest in reviewing its annual report on an inclusive approach to long-term value creation.
Through this annual review, the company intends to communicate to its entire stakeholders on
the far it has moved and the strategies it has put in place towards achieving long-term value
creation as its core objective.
That said, the Coca-Cola's annual review on an inclusive approach to long-term value
creation is a perfect representation of effective...


Anonymous
Really helpful material, saved me a great deal of time.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Similar Content

Related Tags