Editorial
Article Type: Literature and insights From: Accounting, Auditing & Accountability Journal, Volume 27, Issue 4
The truth, the whole truth, and nothing but the truth?
In a paper presented at the 2013 Asia-Pacific Interdisciplinary Research in Accounting (APIRA) conference in Kobe, Kerry Jacobs and I addressed one aspect of the rhetorical and narrative devices potentially used in annual reports to create positive impressions of corporate governance. While our focus was particularly on evidence of portraying management as being engaged in what is known as the hero's journey, there are other ways in which linguistic and narrative devices can be employed in attempts to affect investor and public sentiment. In other words, there is an increasing possibility that the choice of words made to describe past and predicted corporate performance is tailored for the maximum upbeat effect. No surprises there, especially in this age of spin.
What is new is the development of algorithms that can dissect corporate reporting texts and classify subjective phrases in them according to how strongly they match the sentiments expected with the corresponding financial data (Chen et al., 2013). Critics of corporate reporting might be smiling with a little at this point.
The algorithms are intended to identify mismatches between the tone of the report and the “objective value” of the data that might give rise to concern. Nonetheless, as the authors acknowledge, it seems quite normal that:
Results support a common belief that the reporting companies tend to amplify increasing earnings with positive MWEs [multi-word expressions] and mitigate the implications of decreasing earnings with mild and ambiguous MWEs. Since the textual contents in financial statements would deeply influence the creditors and investors in making decisions about the fate of the companies,the companies have motivations to avoid leaking the negative financial status and accentuate the positive financial status(Chen et al., 2013).
This is far from a perfect science. As the authors also concede, the complexities of compound sentences and those attributable to more than one agent (or ambiguous in that regard), leave much text effectively unclassifiable. Maybe we will one day be able to require reports to have a scorecard attached that reveals the extent of overly positive narration, but not yet.
In any case, is this all going too far? What's a little nuance between friends? What's wrong with an occasional white lie,or two? And who can say that optimism in the face of adversity is unwelcome? Are we not human? Do we need numbers to tell us what we can probably glean for ourselves? In the old days we had our own device for noting such mismatches; it was called a bull***t detector, and we all had one.
Which brings me tidily to a situation described below in Barbara L’Huillier's poem, “The Conference”, in which the disparity between conference arguments for sustainability are neatly punctured by observations of the actual environment in which it is being held.
Your own creative contributions can be submitted via ScholarOne, and your e-mail correspondence is always welcome, of course, at: steve.evans@flinders.edu.au
Acknowledgements
Accounting, Auditing & Accountability Journal (AAAJ) welcomes submissions of both research papers and creative writing. Creative writing in the form of poetry and short prose pieces is edited for the Literature and Insights Section only and does not undergo the refereeing procedures required for all research papers published in the main body of AAAJ.
Author guidelines for contributions to this section of the journal can be found at: www.emeraldinsight.com/products/journals/author_guidelines.htm?id=aaaj
Steve Evans
Literary Editor
Reference
Chen, C.-L., Chao-Lin, L., Yuan-Chen, C. and Hsiangping, T. (2013), “Opinion mining for relating multiword subjective expressions and annual earnings in US financial statements”, Journal of Information Science and Engineering, Vol. 29 No. 3, available at: http://arxiv.org/pdf/1210.3865v1.pdf
Further reading
Heaven, D. (2012), “Mine your language”, New Scientist, 3 November, p. 19
