Kate Cullen

Kate Cullen

PhD Thesis Title: Investigating non-professional investors' susceptibility to impression management in earnings press releases: A mixed methods study.

Supervisors: Professor Ciaran O’hOgartaigh & Professor Aileen Pierce

External Examiner: Professor Dr Walter Aerts, University of Antwerp


Impression management research in accounting initially focused on the preparer of corporate reports, providing evidence of biased reporting practices, with the objective of managing investors’ perceptions of company performance. The impact of impression management on investors’ decision-making is not well understood. Due to their lack of investment expertise and their increasing use of more understandable narrative sources of corporate reporting, non-professional investors are most at risk of being misled by impression management in corporate communications. Drawing on theories from psychology, this study investigates non-professional investors’ susceptibility to impression management in earnings press releases. 

Repetition is a pervasive stylistic device used in earnings press releases to emphasise positive outcomes. An experiment is used in this study to examine its impact on non-professional investors’ judgements. Non-professional investors represent a heterogeneous group of investors, and this study distinguishes between experienced and inexperienced non-professional investors to investigate the impact of experience on their susceptibility to impression management. Eye-tracking and interviews are used to complement the experimental findings by exploring non-professional investors’ responses to impression management in greater depth. 

The study provides evidence of less experienced non-professional investors’ bounded, despite intended, rationality when making investment decisions, which makes them susceptible to impression management. The experimental results find that less experienced non-professional investors assess an earnings announcement more favourably when positive information is repeated in an earnings press release. The eye-tracking findings suggest that their bounded rationality is influenced by their less focused information search strategies, when compared with more experienced non-professional investors. In spite of this evidence, interview data show that non-professional investors are aware of impression management and engage in coping mechanisms when making investment decisions. This study offers an insight into the decision-making processes of non-professional investors and the manner in which susceptibility to impression management diminishes with investment experience. 

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