n Investment Analysts Journal - The chairman's statements and annual reports : are they reporting the same company performance to investors?

Volume 2009, Issue 70
  • ISSN : 1029-3523
  • E-ISSN: 2077-0227
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This paper analyses the chairman's statements of the top 50 and bottom 50 companies listed on the JSE ranked by percentage change in profit before taxation. The research examines whether companies with improving and declining performance report good and bad news in different ways. The findings are in line with expectations and both groups of companies show a preference to emphasise the positive aspects of their performance. Furthermore, both groups prefer to take credit for good news themselves, while blaming the external environment for bad news. Managers use accounting narratives in a self-serving manner, rather than reporting performance objectively. The research in this paper has implications for the current state of financial reporting whereby auditors do not formally audit but instead review the chairman's statement to ascertain its consistency with the financial statements.

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