THE EFFECT OF IMPRESSION MANAGEMENT STRATEGIES ON EARNINGS RELEASE ANNOUNCEMENTS

D. ELAINE SANDERS AND JANE L. COELHO


Abstract

This study examines the effect of impression management on the reactions of individual decision-makers in the presence of positive or negative information. In a stock price prediction task void of impression management, inexperienced investors had a more pessimistic expectation for the future stock price when unfavorable financial results were presented than when favorable financial results were presented or when investment experience was present. Predictions were also consistent with the theory of diminishing marginal sensitivity. Impression management in the form of management commentary significantly shifted stock price expectations in the loss domain but did not affect reactions in the domain of gains. The results were consistent across prior investment experience for both the reaction to diminishing marginal sensitivity and impression management.

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Gibson D. Lewis
Center For Business and
Economic Development
SHSU Box 2056
Huntsville TX 77341-2056
936-294-1518 Center Office
936-294-3957 Center Fax