Original Research

The use of graphs as an impression management tool in the annual integrated reports of South African listed entities

Zakiyyah Varachia, Yaeesh Yasseen
Journal of Economic and Financial Sciences | Vol 13, No 1 | a548 | DOI: https://doi.org/10.4102/jef.v13i1.548 | © 2020 Zakiyyah Varachia, Yaeesh Yasseen | This work is licensed under CC Attribution 4.0
Submitted: 21 January 2020 | Published: 10 September 2020

About the author(s)

Zakiyyah Varachia, School of Accountancy, Faculty of Commerce, Law and Management, University of the Witwatersrand, Johannesburg, South Africa
Yaeesh Yasseen, School of Accountancy, Faculty of Commerce, Law and Management, University of the Witwatersrand, Johannesburg, South Africa


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Abstract

Orientation: The annual integrated report is one of the primary means used by companies to communicate with stakeholders regarding both financial and non-financial information. However, the format of the annual integrated report has changed, resulting in different communication mediums being used. Graphic disclosure is being used more widely for both financial and non-financial information. Although beneficial, graphs may also be used by management to manipulate how readers interpret results.

Research purpose: The purpose of the study was to analyse the frequency, quality and measurement distortion of graphs in the annual reports of the top 100 South African listed companies.

Motivation for the study: Research on graph usage in South Africa is limited. The study explored the extent to which South African listed companies use graphs in annual reports and if graphs are employed as an impression management tool.

Research approach/design and method: The study followed a descriptive quantitative research method. Graphs in the annual reports of the sampled companies were analysed based on guidelines developed by earlier researchers to determine the quality and measurement distortion of graphs.

Main findings: Graphs are used widely by South African listed companies. South African companies do not enhance the presentational features of graphs to a large degree, but the graphs analysed show significant measurement distortion. Graphs presented tended to overstate the underlying trend as opposed to an understatement.

Practical/managerial implications: The study will be beneficial to the users, regulatory bodies, auditors and the management of companies to understand how graphs can be used to alter the presentation of results, which could result in incorrect decisions being taken.

Contribution/value-add: This study contributes to the body of research regarding the quality of annual integrated reports in a South African context and may assist users who use these reports to understand how graphs can be used as a manipulation tool.


Keywords

annual integrated report; graph; impression management; measurement distortion; presentational enhancement

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