The Correlation Between Annual Reports’ Narratives and Business Performance: A Retrospective Analysis

Yubin Qian,Ya Sun

doi:10.1177/21582440211032198

Abstract

This article investigates the extant literature on the correlation between narratives in corporate annual reports and corporate performance. Prior studies are reviewed for overall characteristics, research topics, theoretical foundations, and methods. Articles published between 2000 and 2018 were analyzed using the content analysis method. The results demonstrated that prior studies generally show an increasing trend with salient interdisciplinarity. Mapping and predictability between annual reports’ narratives and business performance have been the prevailing topics. The impression management and agency theories are the most frequent theoretical references. More importantly, complexity of research methods was found in data, analytical approaches, and variables. The emphasis on narratives in prior research proves the necessity of contextualizing narratives in business communication. Future work would benefit from a “narrative framework” that incorporates linguistic, socio-cultural, and organizational perspectives into the correlation study. The article presents the first study to investigate the correlation studies through content analysis.

Highlights

Business performance refers to “the fulfillment of economic goals of a company” (Venkatraman & Ramanujam, 1986, p. 803), which is commonly measured by financial indicators
The ways in which business performance is explicitly or implicitly expressed by narratives has given impetus to an increasing number of correlation studies, with particular attention paid to the relation of narratives in corporate annual reports to corporate performance
Whereas Duriau et al (2007) addressed the methodological issues of the content analysis in the organizational studies domain, we focus on the science mapping of correlation studies by using content analysis as an analytical technique

Summary

Introduction

Business performance refers to “the fulfillment of economic goals of a company” (Venkatraman & Ramanujam, 1986, p. 803), which is commonly measured by financial indicators. The inherited objectivity of financial indicators obscures the evaluation and measurement of management staff, whose sensibility of the business status is often of importance to investment This issue has prompted increasing research into narratives, that is, a natural language other than financial values in corporate discourse, corporate annual reports in particular, in attempts to mine high-value information that maps onto or predicts business performance. The ways in which business performance is explicitly or implicitly expressed by narratives has given impetus to an increasing number of correlation studies, with particular attention paid to the relation of narratives in corporate annual reports to corporate performance Narratives under such focus are more than an informal mode of communication that writers can either adopt or reject. An understanding of the discoursal nature of narratives will aid in examining both their complexity and pervasiveness and their connection to the development of selves and communal interests in business communication

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