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The nature, use and impression management of graphs in social and environmental accounting Full Terms & Conditions of access and use can be found at https://www.tandfonline.com/action/journalInformation?journalCode=racc20 Accounting Forum ISSN: 0155-9982 (Print) 1467-6303 (Online) Journal homepage: https://www.tandfonline.com/loi/racc20 The nature, use and impression management of graphs in social and environmental accounting Michael John Jones To cite this article: Michael John Jones (2011) The nature, use and impression management of graphs in social and environmental accounting, Accounting Forum, 35:2, 75-89, DOI: 10.1016/ j.accfor.2011.03.002 To link to this article: https://doi.org/10.1016/j.accfor.2011.03.002 Published online: 28 Feb 2019. Submit your article to this journal Article views: 317 View related articles Citing articles: 8 View citing articles https://www.tandfonline.com/action/journalInformation?journalCode=racc20 https://www.tandfonline.com/loi/racc20 https://www.tandfonline.com/action/showCitFormats?doi=10.1016/j.accfor.2011.03.002 https://www.tandfonline.com/action/showCitFormats?doi=10.1016/j.accfor.2011.03.002 https://doi.org/10.1016/j.accfor.2011.03.002 https://www.tandfonline.com/action/authorSubmission?journalCode=racc20&show=instructions https://www.tandfonline.com/action/authorSubmission?journalCode=racc20&show=instructions https://www.tandfonline.com/doi/mlt/10.1016/j.accfor.2011.03.002 https://www.tandfonline.com/doi/mlt/10.1016/j.accfor.2011.03.002 https://www.tandfonline.com/doi/citedby/10.1016/j.accfor.2011.03.002#tabModule https://www.tandfonline.com/doi/citedby/10.1016/j.accfor.2011.03.002#tabModule Accounting Forum 35 (2011) 75–89 Contents lists available at ScienceDirect Accounting Forum journa l homepage: www.e lsev ier .com/ locate /acc for The nature, use and impression management of graphs in social and environmental accounting Michael John Jones ∗ School of Economics, Finance and Management, University of Bristol, 8 Woodland Road, Bristol BS8 1TN, United Kingdom a r t i c l e i n f o Article history: Received 6 September 2010 Received in revised form 20 January 2011 Accepted 3 March 2011 Keywords: Graphical practices Impression management Social and environmental accounting a b s t r a c t Social and environmental reports are growing in popularity. They are voluntary, unregu- lated documents. This study investigates graph usage in social and environmental reports. The findings show that graphs are widely used. Key managerial preferences are shown to be air pollution, waste output, energy usage and employees. High profile industrial sec- tors, particularly the extractive industry, used graphs the most. There was clear evidence of impression management in graph usage. In terms of trends selected and in the distor- tion of those trends, there was an overwhelming portrayal of good rather than bad news. Companies in high impact industries tended to present relatively more good news than bad news in graphs and distort graphs relatively more favourably than those in low impact companies. This was particularly true for one high impact industry, the extractive indus- try. Companies are not, therefore, using graphs properly to enhance the communicative effectiveness of their corporate social and environmental disclosures. © 2011 Elsevier Ltd. All rights reserved. 1. Introduction The production by companies of stand-alone social and environmental reports (SERs) is a comparatively new phe- nomenon. SERs represent an attempt by companies to communicate to their stakeholders social and environmental information which is distinct from, but arguably complementary to, the financial information in the annual reports. Although social and environmental accounting dates back to the 1960s and 70s, it is only fairly recently that companies, respond- ing to societal pressures for social and environmental information, have started to produce SERs in any numbers (Simnett, Vanstraelen, & Chua, 2009). Corporate social and environmental activities were previously reported, if at all, in the corporate annual report. There has been much debate in the social and environmental literature about the degree to which social and environmental accounting represents accountability or is actually about reputation building (Cooper & Owen, 2007; Owen, 2007). Most research into SER has thus been done to date on annual reports. However, Bebbington & Larrinaga (2007), Bebbington, Larrinaga, & Moneva (2008) argue that systematic surveys of trends in stand-alone environmental reporting are necessary to complement surveys of environmental reporting in annual reports. This paper aims to contribute to our knowledge and understanding of corporate disclosure practice in SERs, especially the use of presentational formats, a previously neglected area. In particular, this paper looks at the use and abuse of graphs in SERs. Voluntary disclosure of social and environmental information is an important part of the way companies communicate to their stakeholders. Graphs represent an important corporate reporting communication format and can be used by companies to synthesise and display information to readers in an easily digestible way. Graphs, used properly, have many features which ∗ Tel.: +44 117 928 9000; fax: +44 117 928 8577. E-mail address: michaeljohn.jones@bristol.ac.uk 0155-9982/$ – see front matter © 2011 Elsevier Ltd. All rights reserved. doi:10.1016/j.accfor.2011.03.002 dx.doi.org/10.1016/j.accfor.2011.03.002 http://www.sciencedirect.com/science/journal/01559982 http://www.elsevier.com/locate/accfor mailto:michaeljohn.jones@bristol.ac.uk dx.doi.org/10.1016/j.accfor.2011.03.002 76 M.J. Jones / Accounting Forum 35 (2011) 75–89 enhance communicative effectivenesses such as attracting attention, synthesising data, highlighting trends and enhancing data recall (Beattie & Jones, 2008). In this case, they will be discharging their accountability to diverse external constituencies. In addition, they can potentially also be used to present information to give a partial and selective view (as, for example in Harte & Owen, 1991) which will portray the company in a favourable light. In this case, the corporate disclosures will be self-seeking. A particularly interesting aspect of the extant body of research into corporate disclosure using graphs is the discovery of apparent widespread impression management. This is where management presents information so that it gives a more favourable impression of a company’s activities than is actually warranted by the company’s performance. Impression man- agement is a common phenomenon that has been found in a number of different social, cultural and organisational settings. It can be traced back to the work of Goffman (1959) who showed that individuals in social situations try to convey to third parties particular impressions of themselves. In a sense, they are role playing. Early work from the psychological literature confirmed that individuals attempt to control what other people think of them (e.g. Schlenker, 1980). In accounting, there has been extensive research into not only earnings management (see Schipper (1989) for a review), but also into presentational management (such as accounting narratives, photographs and graphs).1 In financial graphs research, impression manage- ment has been demonstrated in three main areas: selectivity, measurement distortion and presentational enhancement (see, for example, Beattie & Jones, 2008, 2000b). The use of graphs in the SERs of UK companies presents a new corporate reporting arena in which to study the use and possible abuse of graphs. SERs represent a particularly interesting area of study for three main reasons. First, these reports are unregulated and allow management full discretion in terms of the measurement, disclosure and presentation of information. This enables management, if it so wishes, to be selective in its use of graphs. As such it proves a potentially fertile area in which to explore the use of impression management. This is especially important as research has criticised environmental disclosures in annual reports as self-serving and for being public relations documents (e.g. Neu, Warsame, & Pedwell, 1998). If graphs are presented with the purpose of fulfilling an accountability imperative one would expect them to be presented in an unbiased and non-selective way. If, however, they are about reputation building one would expect them to be used in a self-serving way. Second, it permits the exploration of a wider set of graphs than has previously been examined (social, environmental as well as financial variables). Third, many of the potential topics graphed in SERs have a very different character to those topics traditionally studied. To date, the main variables analysed have been financial (such as sales, earnings and dividends). Unlike social and environmental variables, underlying financial data will have been audited and drawn up according to accepted accounting conventions. Moreover, managers typically seek to maximise financial variables so as to create a rising trend. Again this is not the case in SERs. For most, perhaps even the majority of, social and environmental variables (e.g. health and safety statistics, air emissions, waste and pollution) the reverse is true. Managerial incentives are all in the opposite direction. If impression management occurs management will typically seek to measure, disclose and present a decline, rather than an increase in these variables. There are three main research objectives. First, to investigate the nature and extent of graph use in social and environmen- tal reports. Second, to identify those issues that management have highlighted as important in their SERs. This research thus gives an insight into managerial views of important social and environmental issues. And third, to document the extent of any of the three main types of impression management (selectivity, measurement distortion and presentational enhancement). The sample investigated is the SERs of 63 UK companies. The main contribution of this research is thus that it contributes to our understanding of corporate disclosure practice in two main ways. First, it looks at an underdeveloped research area, the content and nature of corporate stand-alone SERs (Bebbington & Larrinaga, 2007; Bebbington et al., 2008). It then also answers the call in the literature by Beattie and Jones (2008) for research into the use and abuse of graphs in social and environmental reporting. SERs represent an important unregulated, emergent communicational mechanism in which one might expect the incidence of impression management to be even greater than in financial reporting. This expectation is tested using, in particular, the effect of industrial classification. There is also a modest contribution to the methodological debate on the use of Graphical Distortion Indices to measure the accuracy of graphical draughtsmanship, by comparing the results of two very different distortion indices: the Graphical Discrepancy Index (GDI) and the Relative Graphical Discrepancy Index (RGDI). The remainder of the paper consists of four sections followed by a conclusion. Section 2, which follows, looks at two important strands of pertinent literature. This is followed in Section 3 by the research methods used. In Section 4, the main findings are outlined in seven tables. Finally, in Section 5, the main themes are discussed and their significance evaluated. 2. Literature review Two separate literatures underpin this research: the social and environmental reporting literature and the impression management in financial graphs literature. Both these literatures are relatively recent and form a complementary and interrelated base which informs this particular study. The lens of impression management is used to frame the study of 1 Jones and Shoemaker (1994) and Merkyl-Davies and Brennan (2007) provide good surveys of the relevant studies into accounting narratives, while Beattie and Jones (2008) cover financial graphs. McKinstry (1996), Preston, Wright and Young (1996) and Graves, Flesher and Jordan (1996) look at photographs. M.J. Jones / Accounting Forum 35 (2011) 75–89 77 graphs in a social and environmental reporting context. This lens