Academic Research Case-Seminar 6


Academic Research Case-Seminar 6

17-68 Impression management in sustainability reports: an empirical investigation of the use of graphs. Accounting and the Public Interest

a. What is the issue being addressed in the paper?

Stand-alone sustainability reporting offers substantial potential benefit and mainstream accounting researchers adulate the documents as tools of increased corporate transparency and accountability. However, the rise of sustainability reporting, largely due to its voluntary nature, has also been criticized as little more than attempts at public relations. Additionally, non-regulated disclosure (as is the case with stand-alone sustainability reporting) increases the potential for corporations to engage in impression management.

Impressive management occurs when management selects the information to display and presents that information in a manner intended to distort readers’ perceptions of corporate achievement.

In this study, the researchers seek to further assess the objectivity of corporate social reporting by

identifying whether corporations use one potential tool of impression management, and graphs in their sustainability reports to present a more favorable view of their social and environmental performance. Also, the researchers attempt to determine whether the use of graphs for impression management varies across social and environmental performance.

b. What are the findings of the paper?

The findings indicate the rapid growth in stand-alone reporting on corporate social and environmental performance offers much potential benefit relative to increased transparency and accountability. Unfortunately, the evidence presented suggests that, at least in terms of graphical presentations, companies appear to engage in impression management strategies relative to their use. The sample of companies is far more likely to graph items showing favorable rather than unfavorable trends, and where material distortion in the graphs exists, considerably more often than not, the bias in design presents an image favorable to the firm.

The investigation on whether impression management in the use of graphs in sustainability reports appears to be due to attempts at legitimization, provides mixed results. On one side, graphs of social items for companies with worse social performance exhibit more apparent impression management than the graphs of better-performing firms, thus, supporting the legitimacy argument, although the explanatory power of the regression models is quite modest.

On the other hand, however, the researchers find no evidence of a relation between environmental performance and differences in impression management in the use of environmental graphs.

One possible explanation for the lack of explanatory power regarding differences in the use of graphs as tools of impression management is that the choice to issue a stand-alone sustainability report is, in itself, an impression management strategy. Once that choice is made, firm-specific factors may play only a small role, if any, in the use of report-specific tools for influencing user impressions.

Overall, the findings presented in this paper add support to those critics who lament that

stand-alone sustainability reporting is not about providing meaningful accounting of corporate impacts across the sustainability domain, but more on projecting an image of positive performance.

c. Why is this paper important to auditors, and what are the implications of this paper for the auditing profession?

The voluntary, non-regulated nature of the practice leaves it open for potential abuse, and to the extent that biased reporting reduces transparency, it may very well lead to lower levels of corporate accountability. Unfortunately, it appears that many users of the stand-alone reports fail to realize the inherent biases in the reporting, and continue to laud the practice as evidence of increased corporate transparency and accountability. As such, it is important to elucidate on what corporate sustainability reports are and are not.

This paper provides corroborating evidence that stand-alone sustainability reporting is more about projecting an image of positive performance rather than providing meaningful accounts. Therefore, the findings suggest that organizations such as the Global Reporting Initiative may need to provide guidance on “how” the information gets portrayed in reports.

The Global Reporting Initiative would provide an opportunity for auditors, to analyze the information companies present in corporate sustainability reports. As of yet interested parties have not fully agreed on what information can and should be audited. Concern exists about the suitability of the criteria used to prepare the reports and what performance and reporting standards the auditor should use.



Cho, C. H., Michelon, G., & Patten, D. M. (2012). Impression Management in Sustainability Reports: An Empirical Investigation of the Use of Graphs. Accounting & The Public Interest, 12(1), 16-37. doi:10.2308/apin-10249

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