Inertia in the Attributional Content of Annual Accounting Narratives

Posted: 29 Nov 2001


Narrative disclosures in annual reports reflect explanatory activities in which specific attribution patterns can be identi-fied. Research on corporate attributional behaviour within the context of financial accounting narratives has documented this behaviour and evidenced significant preferences for certain kinds of explanations in particular circumstances. This kind of research typically relies on cross-sectional data. There exist few statistically validated conclusions regarding the character and consequences of such verbal behaviour over time. This paper reports on a study investigating the change in narrative explanation practices over time. In this longitudinal research special attention is given to the relative strength of consistency and inertial forces on the attributional behaviour in annual reports. It is argued that there are a variety of forces that make that the explanatory patterns in annual reports are likely to be very similar year after year. Reporting practices can be to a great extent unadaptive, in the sense that they become programmed through the development of habit, precedents, traditions and formalized procedures. This is not to say that reporting practices do not change, but that changes even in the way corporate outcomes and actions are explained, are expected to be modest. The purpose of the research was to determine the extent to which the attributional content and framing in annual narrative reports changed over a period of 8 years, and whether these changes were related to certain organizational characteristics of the reporting companies conceptualized as potential sources of inertial forces. Overall the results confirm a significant degree of consistency in the attributional content of accounting narratives over time. Evidence of an inertial effect of company listing status and performance history was convincingly present as to the assertiveness aspects of attributional behaviour and as to the differential use of accounting language in the explanation of financial accounting outcomes.

Keywords: Accounting language; Content analysis; Attributional behaviour; Narrative disclosure; Accounting narratives; Impression managaement

JEL Classification: M41

Suggested Citation

Aerts, Walter, Inertia in the Attributional Content of Annual Accounting Narratives. Available at SSRN:

Walter Aerts (Contact Author)

University of Antwerp ( email )

Prinsstraat 13
Antwerpen, B-2000
003232654110 (Phone)
003232654064 (Fax)

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