The tone of business model disclosure: an analysis of integrated reports of JSE listed entities

Abstract

Orientation: Stakeholders (such as shareholders) provide resources to entities to ensure management has adequate tools to execute the strategy. The business model disclosure shows how resources provided by stakeholders will be utilised to create value. However, the use of impression management strategies in the business model disclosure as a means to promote corporate image was raised as a major concern by prior researchers. More specifically, the use of “tone” (i.e. thematic manipulation) to portray entities in a good image has attracted the attention of researchers. Research Purpose: The purpose of this study is to determine whether JSE listed entities adopt impression management strategies by manipulating the tone of the business model disclosure provided in their integrated reports. Significance of Study: This study contributes to enhancing the quality of disclosure and highlighting key observations in the business model disclosure within the South African context. To the best of the researcher’s knowledge, this is a pioneering study within the South African context. Stakeholders and regulatory bodies (such as the JSE) might use findings of this study to gauge the usefulness of the business model disclosure. Overview of Research Method: This study followed a quantitative approach. Every sentence in the business model disclosure designated section in the integrated reports of a sample of 88 entities from the Top 100 JSE listed entities was read and analysed. The sample was selected based on the highest market capitalisation for the 2018 Financial year-end. Although the data collected was qualititative in nature, it was used to derive statistical results interpreted by the researcher. The research design comprised of; a manual content analysis, a univariate analysis and a multivariate analysis. Main Findings: This study found that “non-positive tone” is more dominant in the business model disclosure. The findings do not show the adoption of impression management techniques in the business model disclosure provided in the integrated reports within the South African context. As depicted by the results, there was also no significant statistical relationship between disclosure tone and the set of disclosure variables (i.e. corporate governance, performance and disclosure verifiability).The mandatory inclusion of the business model disclosure as required by the JSE might be a factor that contributes to the contrasting results of this study in comparison with previous studies