Are Annual Report Graphs Being Used for Making Performance Attributions?

Abstract

Previous literature on performance attributions has focused exclusively on annual report narratives. The objective of this article is to determine whether graphs in annual reports could be used for making performance attributions. The analysis focuses on annual reports of 33 commercial banks from 7 Central and Eastern European countries during 2006 to 2013. In line with expectations and results of previous research, there is strong support for the presence of negative performance attributions and attributional enhancements. A decrease in a bank’s profitability is associated with an increase in the use of external indicator graphs. If a bank’s profitability increases simultaneously with deterioration in a graphed external indicator, the use of such external indicator graphs increases compared with when profitability increase occurs simultaneously with an improvement in a graphed external indicator. There also exist signs that negative performance attributions are intentional and potentially driven by impression management motives.