Corporate Disclosure Strategies on Company Websites: Reviewing Opportunistic Practices

Abstract

This work reviews and illustrates potentially misleading disclosure practices which may respond to opportunistic management behavior. We focus on press releases announcing annual earnings posted on company websites. The complexity of corporate communication practices has increased over time pro- viding users with elaborate reports including detailed information on company annual results. Additionally, companies also issue press releases summarizing the annual results. These press releases are essential for a firm’s disclosure strategy, and are accessible to investors and the general public through company websites and news wire services. They are fundamental for a timely presentation of a firm’s performance, potentially influencing the perceptions of the reader. The negative aspect of these press releases is that their content is unregulated, and managers can select and present the information in a misleading way. Our objective is to identify the strategies used to do so. The practices analyzed in this work are subtle tech- niques which may not be easy to detect. The identification of these practices is relevant for the different parties involved or those affected by corporate disclo- sures. Decisions taken using this potentially biased information is likely to have an effect on the efficient allocation of economic resources. Therefore, the contribution of this research is important and relevant in order to extend corporate communi- cation research.