Online from: 2000
Subject Area: Information and Knowledge Management
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|Title:||Intellectual capital information and stock recommendations: impression management?|
|Author(s):||Subhash Abhayawansa, (Faculty of Business and Enterprise, Swinburne University of Technology, Hawthorn, Australia), James Guthrie, (Department of Accounting and Corporate Governance, Faculty of Business and Economics, Macquarie University, North Ryde, Australia)|
|Citation:||Subhash Abhayawansa, James Guthrie, (2012) "Intellectual capital information and stock recommendations: impression management?", Journal of Intellectual Capital, Vol. 13 Iss: 3, pp.398 - 415|
|Keywords:||Financial analysis, Impression management, Intellectual capital, Sell-side analysts, Stock recommendations, Stocks|
|Article type:||Research paper|
|DOI:||10.1108/14691931211248945 (Permanent URL)|
|Publisher:||Emerald Group Publishing Limited|
|Acknowledgements:||The authors wish to thank the participants at the Accounting and Finance Association of Australia and New Zealand 2011 annual conference (held in Darwin) for their helpful comments on a previous version of this paper.|
Purpose – The purpose of this paper is to investigate what and how intellectual capital information (ICI) conveyed through analyst reports varies by the type of stock recommendation. It draws on the theory of impression management.
Design/methodology/approach – Content analysis is used to investigate ICI in the full text of sell-side analysts’ initiating coverage reports. It categorises ICI by type and three qualitative characteristics: evidence; time orientation; and news-tenor. It explores how the extent, types and qualitative characteristics of ICI found in analyst reports vary by the type of stock recommendation accompanying the analyst report.
Findings – Given the conflicting interests facing analysts and relative amenability of ICI, it was found that analysts use ICI to manage perceptions. In particular, analysts attempt to use ICI in their reports to subdue the pessimism associated with an unfavourable recommendation, increase credibility of favourable recommendations and distinguish sell from hold recommendations.
Practical implications – The paper contributes to the literature on impression management by extending its application to the study of sell-side analysts’ decision processes and it alerts future researchers to the wider role played by ICI beyond its use in generation of forecasts and valuations. The paper's findings have implications for consumers of analyst reports, as the level of negativity/positivity of forecasts and recommendations may be altered as a result of the semantics associated with ICI.
Originality/value – This paper explores analysts’ use of ICI conditional on the type of stock recommendation accompanying the report. Findings are explained using the theory of impression management.
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