Sage Journals: Discover world-class research

Abstract

We explore how publicly listed family and nonfamily firms engage in self-serving attributions in their annual financial reports. We empirically examine how both types of firms emphasize internal attributions for good firm performance (internal-positive attributions) and external attributions for poor firm performance (external-negative attributions). We find that family firms make more external-negative attributions and that the stock market reacts more negatively to external-negative attributions made by family firms. This suggests important theoretical and practical implications for attribution theory and impression management in family firm research.

Keywords

family firms attribution impression management stock market reaction entrenchment alignment

Get full access to this article

View all access options for this article.

References

Aerts

(1994). On the use of accounting logic as an explanatory category in narrative accounting disclosures. Accounting, Organizations and Society, 19, 337-353.

Aerts

(2005). Picking up the pieces: Impression management in the retrospective attributional framing of accounting outcomes. Accounting, Organizations and Society, 30, 493-517.

Ali

Chen

T. Y.

Radhakrishnan

(2007). Corporate disclosures by family firms. Journal of Accounting & Economics, 44, 238-286.

Anderson

R. C.

Mansi

S. A.

Reeb

D. M.

(2003). Founding family ownership and the agency cost of debt. Journal of Financial Economics, 68, 263-285.

Anderson

R. C.

Reeb

D. M.

(2003). Founding-family ownership and firm performance: evidence from the S&P 500. Journal of Finance, 58, 1301-1327.

Baginski

S. P.

Hassell

J. M.

Hillison

W. A.

(2000). Voluntary causal disclosures: Tendencies and capital market reaction. Review of Quantitative Finance and Accounting, 15, 371-389.

Baginski

S. P.

Hassell

J. M.

Kimbrough

M. D.

(2004). Why do managers explain their earnings forecasts? Journal of Accounting Research, 42, 1-29.

Baginski

S. P.

Hassell

J. M.

Wieland

M. M.

(2011). An examination of the effects of management earnings forecast form and explanations on financial analyst forecast revisions. Advances in Accounting, 27, 17-25.

Barker

V. L.

III Barr

P. S.

(2002). Linking top manager attributions to strategic reorientation in declining firms attempting turnarounds. Journal of Business Research, 55, 963-979.

10.

Barron

O. E.

Kile

C. O.

O’Keefe

T. B.

(1999). MD&A quality as measured by the SEC and analysts’ earnings forecasts. Contemporary Accounting Research, 16, 75-109.

11.

Barton

Mercer

(2005). To blame or not to blame: Analysts’ reactions to external explanations for poor financial performance. Journal of Accounting & Economics, 39, 509-533.

12.

Beckman

C. M.

Haunschild

P. R.

(2002). Network learning: The effects of partners’ heterogeneity of experience on corporate acquisitions. Administrative Science Quarterly, 47, 92-124.

13.

Berrone

Cruz

Gomez-Mejía

L. R.

(2012). Socioemotional wealth in family firms: Theoretical dimensions, assessment approaches, and agenda for future research. Family Business Review, 25, 258-279.

14.

Bettman

J. R.

Weitz

B. A.

(1983). Attributions in the board room: Causal reasoning in corporate annual reports. Administrative Science Quarterly, 28, 165-183.

15.

Bolino

M. C.

Kacmar

K. M.

Turnley

W. H.

Gilstrap

J. B.

(2008). A multi-level review of impression management motives and behaviors. Journal of Management, 34, 1080-1109.

16.

Brennan

Merkl-Davies

D. M.

(2013). Accounting narratives and impression management. In Jack

Davison

Craig

(Eds.), the Routledge companion to accounting communication (pp. 109-132). London, England: Routledge.

17.

Brigham

K. H.

Lumpkin

G. T.

Payne

G. T.

Zachary

M. A.

(2014). Researching long-term orientation: A validation study and recommendations for future research. Family Business Review, 27, 72-88.

18.

Brown

A. D.

(1997). Narcissism, identity, and legitimacy. Academy of Management Review, 22, 643-686.

19.

Campbell

W. K.

Sedikides

(1999). Self-threat magnifies the self-serving bias: A meta-analytic integration. Review of General Psychology, 3, 23-43.

20.

Cha

Rifai

Sarraf

(2013). Pharmaceutical forecasting: Throwing darts? Nature Reviews Drug Discovery, 12, 737-738.

21.

Chen

(2015). The most profitable industries in 2015. Forbes. Retrieved from http://www.forbes.com/sites/liyanchen/2015/09/23/the-most-profitable-industries-in-2015/#44a97de7712e

22.

Chrisman

J. J.

Chua

J. H.

Litz

(2003). A unified systems perspective of family firm performance: An extension and integration. Journal of Business Venturing, 18, 467-472.

23.

Chrisman

J. J.

Patel

P. C.

(2012). Variations in R&D investments of family and nonfamily firms: Behavioral agency and myopic loss aversion perspectives. Academy of Management Journal, 55, 976-997.

24.

Chua

J. H.

Chrisman

J. J.

Steier

L. P.

Rau

S. B.

(2012). Sources of heterogeneity in family firms: An introduction. Entrepreneurship Theory and Practice, 36, 1103-1113.

25.

Cicchetti

D. V.

(1994). Guidelines, criteria, and rules of thumb for evaluating normed and standardized assessment instruments in psychology. Psychological Assessment, 6, 284-290.

26.

Clapham

S. E.

Schwenk

C. R.

(1991). Self-serving attributions, managerial cognition, and company performance. Strategic Management Journal, 12, 219-229.

27.

Clarkson

P. M.

Kao

J. L.

Richardson

G. D.

(1999). Evidence that management discussion and analysis (MD&A) is a part of a firm’s overall disclosure package. Contemporary Accounting Research, 16, 111-134.

28.

Clatworthy

Jones

M. J.

(2003). Financial reporting of good news and bad news: Evidence from accounting narratives. Accounting and Business Research, 33, 171-185.

29.

Cole

C. J.

Jones

C. L.

(2004). The usefulness of MD&A disclosures in the retail industry. Journal of Accounting, Auditing & Finance, 19, 361-388.

30.

Conlon

D. E.

Murray

N. M.

(1996). Customer perceptions of corporate responses to product complaints: The role of explanations. Academy of Management Journal, 39, 1040-1056.

31.

Cool

K. O.

Schendel

(1987). Strategic group formation and performance: The case of the U.S. pharmaceutical industry, 1963-1982. Management Science, 33, 1102-1124.

32.

Davis

A. K.

Tama-Sweet

(2012). Managers’ use of language across alternative disclosure outlets: Earnings press releases versus MD&A. Contemporary Accounting Research, 29, 804-837.

33.

Dess

G. G.

Beard

D. W.

(1984). Dimensions of organizational task environments. Administrative Science Quarterly, 29, 52-73.

34.

de Vries

M. F. K

. (1994). The dynamics of family controlled firms: The good and the bad news. Organizational Dynamics, 21(3), 59-71.

35.

Dyer

W. G.

Whetten

D. A.

(2006). Family firms and social responsibility: Preliminary evidence from the S&P 500. Entrepreneurship Theory and Practice, 30, 785-802.

36.

Eddleston

K. A.

Kidwell

R. E.

(2012). Parent–child relationships: Planting the seeds of deviant behavior in the family firm. Entrepreneurship Theory and Practice, 36, 369-386.

37.

Elliott

W. B.

Hodge

F. D.

Sedor

L. M.

(2011). Using online video to announce a restatement: Influences on investment decisions and the mediating role of trust. The Accounting Review, 87, 513-535.

38.

Elsbach

K. D.

(1994). Managing organizational legitimacy in the California cattle industry: The construction and effectiveness of verbal accounts. Administrative Science Quarterly, 39 57-88.

39.

Ensley

M. D.

Pearson

A. W.

(2005). An exploratory comparison of the behavioral dynamics of top management teams in family and nonfamily new ventures: Cohesion, conflict, potency, and consensus. Entrepreneurship Theory and Practice, 29, 267-284.

40.

Fidelity. (n.d.). Pharmaceuticals vs. S&P 500. Retrieved from https://eresearch.fidelity.com/eresearch/markets_sectors/sectors/industries.jhtml?tab=learn&industry=352020

41.

File

K. M.

Prince

R. A.

(1996). Attributions for family business failure: The heir’s perspective. Family Business Review, 9, 171-184.

42.

Fiss

P. C.

Zajac

E. J.

(2006). The symbolic management of strategic change: Sensegiving via framing and decoupling. Academy of Management Journal, 49, 1173-1193.

43.

Ford

J. D.

(1985). The effects of causal attributions on decision makers’ responses to performance downturns. Academy of Management Review, 10, 770-786.

44.

Foster

(1977). Quarterly accounting data: Time-series properties and predictive-ability results. Accounting Review, 52, 1-21.

45.

Gardner

W. L.

Martinko

M. J.

(1988). Impression management in organizations. Journal of Management, 14, 321-338.

46.

Godfrey

(2005). The relationship between corporate philanthropy and shareholder wealth: A risk management perspective. Academy of Management Review, 30, 777-798.

47.

Gomez-Mejía

L. R.

Cruz

Imperatore

(2014). Financial reporting and the protection of socioemotional wealth in family-controlled firms. European Accounting Review, 23, 387-402.

48.

Gomez-Mejía

L. R.

Haynes

K. T.

Núñez-Nickel

Jacobson

K. J.

Moyano-Fuentes

(2007). Socioemotional wealth and business risks in family-controlled firms: Evidence from Spanish olive oil mills. Administrative Science Quarterly, 52, 106-137.

49.

Gomez-Mejía

L. R.

Nunez-Nickel

Gutierrez

(2001). The role of family ties in agency contracts. Academy of Management Journal, 44, 81-95.

50.

Gooding

R. Z.

Kinicki

A. J.

(1995). Interpreting event causes: The complementary role of categorization and attribution processes. Journal of Management Studies, 32, 1-22.

51.

Hallgren

K. A.

(2012). Computing inter-rater reliability for observational data: An overview and tutorial. Tutorials in Quantitative Methods for Psychology, 8(1), 23-34.

52.

Harvey

Madison

Martinko

Crook

(2014). Attribution theory in the organizational sciences: The road traveled and the path ahead. Academy of Management Perspectives, 28, 128-146.

53.

Hayward

M. L.

Rindova

V. P.

Pollock

T. G.

(2004). Believing one’s own press: The causes and consequences of CEO celebrity. Strategic Management Journal, 25, 637-653.

54.

Heider

(1958). The psychology of interpersonal relations. New York, NY: Wiley.

55.

Hienerth

Kessler

(2006). Measuring success in family businesses: The concept of configurational fit. Family Business Review, 19, 115-134.

56.

Highhouse

Brooks

M. E.

Gregarus

(2009). An organizational impression management perspective on the formation of corporate reputations. Journal of Management, 35, 1481-1493.

57.

Ingram

R. W.

Frazier

K. B.

(1983). Narrative disclosures in annual reports. Journal of Business Research, 11, 49-60.

58.

Jaggi

Leung

Gul

(2009). Family control, board independence and earnings management: Evidence based on Hong Kong firms. Journal of Accounting and Public Policy, 28, 281-300.

59.

Jaskiewicz

Dyer

W. G.

(2017). Addressing the elephant in the room: Disentangling family heterogeneity to advance family business research. Family Business Review, 30, 111-118

60.

Jiraporn

DaDalt

P. J.

(2009). Does founding family control affect earnings management? Applied Economics Letters, 16, 113-119.

61.

Kelley

H. H.

Michela

J. L.

(1980). Attribution theory and research. Annual Review of Psychology, 31, 457-501.

62.

Keusch

Bollen

L. H.

Hassink

H. F.

(2012). Self-serving bias in annual report narratives: An empirical analysis of the impact of economic crises. European Accounting Review, 21, 623-648.

63.

Kim

Y. H.

(2010). Self-attribution bias of the CEO: Evidence from CEO interviews on CNBC. Journal of Banking & Finance, 37, 2472-2489.

64.

Kimbrough

M. D.

Wang

I. Y.

(2014). Are seemingly self-serving attributions in earnings press releases plausible? Empirical evidence. The Accounting Review, 89, 635-667.

65.

Lang

M. H.

Lundholm

R. J.

(1996). Corporate disclosure policy and analyst behavior. The Accounting Review, 71, 467-492.

66.

Lant

T. K.

Milliken

F. J.

Batra

(1992). The role of managerial learning and interpretation in strategic persistence and reorientation: An empirical exploration. Strategic Management Journal, 13, 585-608.

67.

Le Breton-Miller

Miller

. (2013). Socioemotional wealth across the family firm life cycle: A commentary on ‘family business survival and the role of boards. Entrepreneurship Theory and Practice, 37, 1391-1397.

68.

Lee

Peterson

Tiedens

L. Z.

(2004). Mea culpa: Predicting stock prices from organizational attributions. Personality and Social Psychology Bulletin, 30, 1636-1649.

69.

(2010a). The information content of forward-looking statements in corporate filings: A naïve Bayesian machine learning approach. Journal of Accounting Research, 48, 1049-1102.

70.

(2010b). Managers’ self-serving attribution bias and corporate financial policies. Retrieve d from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1639005

71.

(2010). Self-promote or not? An examination of the effect of management’s self-promotion in management disclosures. In Arnold

(Ed.), Advances in accounting behavioral research (Vol. 13, pp. 195-218). Bingley, England: Emerald.

72.

(2016). Level of business insights in the MD&A and nonprofessional investors’ judgments. Accounting & Finance. Advance online publication. doi:10.1111/acfi.12192

73.

Libby

Rennekamp

(2012). Self-serving attribution bias, overconfidence, and the issuance of management forecasts. Journal of Accounting Research, 50, 197-231.

74.

Loughran

McDonald

(2011). When is a liability not a liability? Textual analysis, dictionaries, and 10-Ks. Journal of Finance, 66, 35-65.

75.

Loughran

McDonald

(2014). Measuring readability in financial disclosures. Journal of Finance, 69, 1643-1671.

76.

Lumpkin

G. T.

Brigham

K. H.

(2011). Long-term orientation and intertemporal choice in family firms. Entrepreneurship Theory and Practice, 35, 1149-1169.

77.

Madsen

P. M.

Rodgers

Z. J.

(2015). Looking good by doing good: The antecedents and consequences of stakeholder attention to corporate disaster relief. Strategic Management Journal, 36, 776-794.

78.

Malmendier

Tate

(2008). Who makes acquisitions? CEO overconfidence and the market’s reaction. Journal of Financial Economics, 89, 20-43.

79.

Martin

Campbell

J. T.

Gomez-Mejia

(2016). Family control, socioemotional wealth and earnings management in publicly traded firms. Journal of Business Ethics, 133, 453-469.

80.

Merkl-Davies

D. M.

Brennan

N. M.

(2007). Discretionary disclosure strategies in corporate narratives: Incremental information or impression management? Journal of Accounting Literature, 26, 116-194.

81.

Merkley

K. J.

(2014). Narrative disclosure and earnings performance: Evidence from R&D disclosures. The Accounting Review, 89, 725-757.

82.

Miller

Le Breton-Miller

(2005). Managing for the long run: Lessons in competitive advantage from great family businesses. Boston, MA: Harvard Business Press.

83.

Miller

D. T.

Ross

(1975). Self-serving biases in the attribution of causality: Fact or fiction? Psychological Bulletin, 82, 213-225.

84.

Moss

T. W.

Payne

T. G.

Moore

C. B.

(2014). Strategic consistency of exploration and exploitation in family businesses. Family Business Review, 27, 51-71.

85.

Nottenburg

Fedor

D. B.

(1983). Scarcity in the environment: Organizational perceptions, interpretations and responses. Organization Studies, 4, 317-337.

86.

Osma

B. G.

Guillamón-Saorín

(2011). Corporate governance and impression management in annual results press releases. Accounting, Organizations and Society, 36, 187-208.

87.

Park

N. K.

Mezias

J. M.

(2005). Before and after the technology sector crash: The effect of environmental munificence on stock market response to alliances of e-commerce firms. Strategic Management Journal, 26, 987-1007.

88.

Payne

G. T.

Brigham

K. H.

Broberg

J. C.

Moss

T. W.

Short

J. C.

(2011). Organizational virtue orientation and family firms. Business Ethics Quarterly, 21, 257-285.

89.

Porter

M. E.

Kramer

M. R.

(2006), Strategy and society: The link between competitive advantage and corporate social responsibility. Harvard Business Review, 84(12), 42-56.

90.

Poza

E. J.

Alfred

Maheshwari

(1997). Stakeholder perceptions of culture and management practices in family and family firms: A preliminary report. Family Business Review, 10, 135-155.

91.

Prencipe

Markarian

Pozza

(2008). Earnings management in family firms: Evidence from R&D cost capitalization in Italy. Family Business Review, 21, 71-88.

92.

Salancik

G. R.

Meindl

J. R.

(1984). Corporate attributions as strategic illusions of management control. Administrative Science Quarterly, 29, 238-254.

93.

Schlenker

B. R.

(1980). Impression management: The self-concept, social identity, and interpersonal relations. Monterey, CA: Brooks/Cole.

94.

Schulze

W. S.

Lubatkin

M. H.

Dino

R. N.

Buchholtz

A. K.

(2001). Agency relationships in family firms: Theory and evidence. Organization Science, 12, 99-116.

95.

Short

J. C.

Payne

G. T.

Brigham

K. H.

Lumpkin

G. T.

Broberg

J. C.

(2009). Family firms and entrepreneurial orientation in publicly traded firms: A comparative analysis of the S&P 500. Family Business Review, 22, 9-24.

96.

Staw

B. M.

McKechnie

P. I.

Puffer

S. M.

(1983). The justification of organizational performance. Administrative Science Quarterly, 28, 582-600.

97.

Stewart

(2003). Help one another, use one another: Toward an anthropology of family business. Entrepreneurship Theory and Practice, 27, 383-396.

98.

Tsai

W. H.

Hung

J. H.

Kuo

Y. C.

Kuo

(2006). CEO tenure in Taiwanese family and nonfamily firms: An agency theory perspective. Family Business Review, 19, 11-28.

99.

Villalonga

Amit

(2006). How do family ownership, control and management affect firm value? Journal of Financial Economics, 80, 385-417.

100.

Wang

(2006). Founding family ownership and earnings quality. Journal of Accounting Research, 44, 619-656.

101.

Ward

J. L.

(1997). Growing the family business: Special challenges and best practices. Family Business Review, 10, 323-337.

102.

Weiner

(1985). An attributional theory of achievement motivation and emotion. Psychological Review, 92, 548-573.

103.

Weiner

(2000). Intrapersonal and interpersonal theories of motivation from an attribution perspective. Educational Psychology Review, 12, 17-30.

104.

Wright

Chrisman

J. J.

Chua

J. H.

Steier

L. P.

(2014). Family enterprise and context. Entrepreneurship Theory and Practice, 38, 1247-1260.

105.

Yang

M. L.

(2010). The impact of controlling families and family CEOs on earnings management. Family Business Review, 23, 266-279.

106.

Lumpkin

G. T.

Sorenson

R. L.

Brigham

K. H.

(2012). The landscape of family business outcomes: A summary and numerical taxonomy of dependent variables. Family Business Review, 25, 33-57.

107.

Zahra

S. A.

(2007). Contextualizing theory building in entrepreneurship research. Journal of Business Venturing, 22, 443-452.

108.

Zellweger

(2007). Time horizon, costs of equity capital, and generic investment strategies of firms. Family Business Review, 20, 1-15.

109.

Zellweger

T. M.

Eddleston

K. A.

Kellermanns

F. W.

(2010). Exploring the concept of familiness: Introducing family firm identity. Journal of Family Business Strategy, 1, 54-63.

110.

Zellweger

T. M.

Kellermanns

F. W.

Chrisman

J. J.

Chua

J. H.

(2012). Family control and family firm valuation by family CEOs: The importance of intentions for transgenerational control. Organization Science, 23, 851-868.

111.

Zellweger

T. M.

Nason

R. S.

Nordqvist

Brush

C. G.

(2013). Why do family firms strive for nonfinancial goals? An organizational identity perspective. Entrepreneurship Theory and Practice, 37, 229-248.

112.

Zerfass

(2008). Corporate communication revisited: Integrating business strategy and strategic communication. In Zerfass

van Ruler

Sriramesh

(Eds.), Public relations research (pp. 65-96). Berlin, Germany: Springer Verlag.

113.

Zhang

Wiersema

M. F.

(2009). Stock market reaction to CEO certification: The signaling role of CEO background. Strategic Management Journal, 30, 693-710.

114.

Zott

Huy

Q. N.

(2007). How entrepreneurs use symbolic management to acquire resources. Administrative Science Quarterly, 52, 70-105.

115.

Zuckerman

(1979). Attribution of success and failure revisited, or: the motivational bias is alive and well in attribution theory. Journal of Personality, 47, 245-287.

Blame You,Blame Me: Exploring Attribution Differences and Impact in Family and Nonfamily Firms

Abstract

Keywords

Get full access to this article

References