Forward-looking reporting caught between company performance and the economic situation
Fehre, Kerstin Hoefer, Julia
Fehre, Kerstin
Hoefer, Julia
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Publication Type
Conference Proceeding
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Supervisor
Publication Year
2015
Journal
Academy of Management Proceedings
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Publication Volume
2015
Publication Issue
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Publication End page
Publication NUmber of pages
1
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Abstract
This research explores both the impact of company performance and economic situation on the degree of future orientation in company reporting and the textual emphasis within forward-looking statements (company-external vs. company-internal prospective information). The examination is built on annual reports of all German HDAX companies during the period from 2003 to 2012. The results of the regression analysis reveal that high profitability and an improvement in the economy lead to an increased future orientation in company reporting. Hence, companies in an advantageous position send signals of long-lasting positive developments to capital markets. Results concerning the textual emphasis of the companies' forward-looking reporting demonstrate that the degree of forward-looking external statements increases due to company's profitability and to a downturn in the economy. In contrast, the degree of forward-looking internal statements increases due to an improvement in the economic situation. Furthermore, the economic situation positively directs the relation between performance and prospective internal reporting. Thus, forward-looking reporting focuses on the company's environment more strongly only if the economic situation is in decline (problem-oriented attention control) or if the current advantageous position of the company is preserved by the consideration of potential opportunities and risks arising from the company's environment.
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Keywords
Computer-Aided Text Analysis (CATA), Forward-Looking Statements, Future-Oriented Reporting