Picking up the pieces: impression management in the retrospective attributional framing of accounting outcomes

Abstract Self-serving attributional tendencies in annual report narratives are generally construed as purposive impression management behaviour. Attributional biases in accounting narratives could, however, be primarily the result of a cognitive informational process rather than of an external impression management process. Existing research results are equivocal on this point. In this paper we treat a capital market context as a pivotal variable to discern situations of strong and weak motivational influences and contrast the self-serving reasoning tendencies in listed and unlisted companies. A second purpose of the paper is to explore the impact of content characteristics of the explained effect in attributional statements on the self-serving tendencies. Our research reveals that self-serving tendencies in attributional behaviour, especially when operationalized as explicit impression-relevant attributional statements (entitlements, enhancements, excuses, causality denials and justifications), are significantly affected by contextual factors with motivational impact and, depending on the context, reflect attributional patterns that are counterintuitive from an informational perspective. The research results also indicate that the self-serving profile of the attributional explanations strongly depends on the nature of the accounting effect explained with ramifications on the listed/unlisted dichotomy and on the manner in which positive news is constructed in the directors’ reports of listed companies.