An Examination of the Effect of the President's Letter and Stock Advisory
Service Information on Financial Decisions
Steven E. Kaplan, Susan Pourciau and Philip M. J. Reckers
Annual corporate reports to stockholders contain the president's letter
to shareholders, which generally has been found to be a "self-serving"
commentary [Bettman and Weitz, 1983; Salancik and Meindl, 1984; and Staw,
McKechnie, and Puffer, 1983]. Investors may also obtain corporate information
from sources external to the firm, such as stock advisory services. Few
published studies exist on the role these two sources play in interpreting
the firm's financial statements and making decisions about the firm.
Based primarily upon the impression management literature, an experiment
was conducted to examine the effects of the president's letter and stock
advisory service information on financial decisions. Three different impression
management strategies were considered in the experiment. The multivariate
results indicate that each of these two variable significantly affects
decisions of individual investors. Further, as suggested by Salancik and
Meindl , an excuse strategy was not as effective as two other approaches.
to BRIA 1990, Volume 2 Contents