The Construction of Reality Defended on Thursday, 25 September 2003

A number of prior studies have revealed that CEOs' accounts of company performance are self-serving. These studies, predominantly conducted in the United States, show that CEOs are willing to take credit for favourable outcomes, but are reluctant to assume responsibility for unfavourable ones. Recent social-psychological research, however, suggests that such self-serving biases are less universal than they were previously thought to be and might be more typical for western than for eastern societies. Therefore, we examine whether such cultural differences are also present in managers' explanations for company results. Content analysing 278 letters to the shareholders of American, Dutch, and Japanese companies we find that CEOs' explanations do cross-culturally vary, thereby complementing and extending previous work on self-serving biases in accounting narratives.


Financial reporting, accounting narratives, CEO's letter to the shareholders, chairman's statement, cultural differences, impression management, attribution theory, self-serving behaviour

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