Linguistic Strategies Of Impression Management In Risk Disclosures

After the accounting scandals of the early 2000 s and the credit crunch in 2007,narrative information disclosures are increasingly drawing attention from researchers,among which risk disclosures have become one of the research focuses in today’s corporate domain.The research on risk disclosures mainly involves economics and management.In addition,because of the linguistic characteristics of risk disclosure,risk disclosures have become the research object of linguistics.Based on the review of previous studies on risk disclosures,there are some deficiencies in existing research.Firstly,from the perspective of hermeneutic patterns,studies on risk disclosures are mostly empirical researches without guidance of fundamental theory.Therefore,they fail to explain the quality of risk disclosures and researchers’ opinions on the usefulness of risk disclosures are still mixed.In terms of research contents,the measure of risk disclosure quality is still one-sided for it only examines the proportion of words or sentences expressing risk or uncertainty,and the readability of risk disclosure texts.Due to the strong development momentum of IT companies and a large number of investors choosing to invest IT companies,this study selects risk disclosures of IT companies as the research object from the perspective of practical value.In addition,this study takes the commonly-used impression management strategies as the starting point and explores the relationship between linguistic strategies and company characteristics including company performance and firm size to investigate whether management are engaged in impression management behaviors and which linguistic strategies are used to constitute those behaviors.Then,appraisal theory is adopted to explain how linguistic strategies play their roles in influencing readers’ impressions.Specifically,as to the measurement of linguistic strategies,the three linguistic strategies,namely readability manipulation,self-serving attribution and tone are respectively quantified by readability software,content analysis,and sentiment dictionary approach.Besides,as to the measurement of company characteristics,ROA,operating profit,and net profit are used as indicators of company performance,and logarithm of market capitalization is used as the measure of company size.The obtained data are analyzed by correlation analysis and partial correlation analysis.This thesis finds low readability of American IT companies’ risk disclosures,the ubiquitous use of self-serving attributions in risk disclosures and relatively negative tone of risk disclosures.In addition,the results show that larger companies are less likely to conduct impression management behaviors in forms of manipulation of readability and manipulation of tone since the company size is positively correlated with readability at syntactic level and coherent level and negatively correlated with the tone of the text.Based on the widely-accepted explanation of impression management studies,this phenomenon results from that larger companies are under more monitor and are reluctant to attract attention to high profitability because this can result in new taxes or regulations.This thesis also found self-serving attribution is ubiquitous in American IT companies’ risk disclosures regardless of company size and firm size does not affect attribution patterns.Besides,a significant association between company performance and three impression management strategies is also found in this study.To be specific,compared with companies with better performance,companies with worse performance tend to disclose risk disclosures with lower readability,higher frequency of self-serving attributions,and more positive words.In another word,bad-performing companies are more likely to disclose less readable risk disclosures with less frequent function words and more complex noun phrases as well as less coherent information,and use more self-serving attribution patterns and more positive words in their risk disclosures.Therefore,badly performing companies subtly deploy linguistic strategies to affect stakeholders’ attitudes imperceptibly while reading,aiming influence potential investors’ impressions on the prospect of the firms.In general,in terms of the theoretical level,this study constructs a practical theoretical framework by combining impression management theory with appraisal theory,which provides a better insight into impression management behaviors in risk disclosures.At the practical level,the current study provides an enlightening insight into the quality of risk disclosures and reveals the reference value of risk disclosures to stakeholders.