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The Pursuit of Relevance: Studies on the Relationships between Accounting and Users
Stockholm University, Faculty of Social Sciences, Stockholm Business School.ORCID iD: 0000-0001-9646-6320
2016 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

Relevance has become one of the key priorities for accounting policy, and implies that accounting should have an impact on the economic decision-making of accounting users. Despite the increased importance given to users, however, little is known concerning the properties of such relevance in practice. Furthermore, the lack of insight into the practices of users has been mitigated with a theoretical perspective of decision-making which supports an insufficient understanding of how stock markets function and how accounting users behave.

This dissertation contributes to the emerging interest in the sociology of financial analysis by following users in their pursuit of relevance. By theorising financial analysis as a social and institutional practice, this dissertation investigates not only how accounting is relevant but also how such relevance is influenced by the particular setting of accounting users. Furthermore, the understanding of relevance as located within the activities leading up to a decision is here extended by emphasising the continuous activities of users and therefore also the role of accounting in the management of their decisions.

Based on in-depth field studies targeting the activities of (sell-side) equity research analysts and equity sales brokers, this dissertation presents four papers addressing different notions of accounting, users and relevance. Theoretical insights are drawn from sociology and include actor-network theory, dramaturgy and text-and-conversation-theory. The studies find that the organisation of the sell-side industry necessitates a use of accounting which accentuates the links between accounting, users and investments recommendations. This dissertation concludes that, in order to produce and sustain such links, relevance becomes (a) mediated by a variety of elements, (b) based on the production of differences, and (c) mutually constitutive for accounting and users. 

Place, publisher, year, edition, pages
Stockholm: Stockholm Business School, Stockholm University , 2016. , 75 p.
Keyword [en]
Accounting, Information, Relevance, Financial analysis, Social and Institutional Practice, Capital Markets, Sell-side, Analyst, Broker, Equity sales, Investment recommendations
National Category
Business Administration
Research subject
Business Administration
Identifiers
URN: urn:nbn:se:su:diva-133275ISBN: 978-91-7649-492-9 (print)OAI: oai:DiVA.org:su-133275DiVA: diva2:958028
Public defence
2016-10-27, Gröjersalen, hus 3, Kräftriket, Roslagsvägen 101, Stockholm, 13:00 (English)
Opponent
Supervisors
Note

At the time of the doctoral defense, the following papers were unpublished and had a status as follows: Paper 2: Manuscript. Paper 3: Manuscript. Paper 4: Manuscript.

 

Available from: 2016-10-04 Created: 2016-09-05 Last updated: 2016-09-23Bibliographically approved
List of papers
1. Colouring the numbers – on the role of intellectual capital in financial reporting
Open this publication in new window or tab >>Colouring the numbers – on the role of intellectual capital in financial reporting
2013 (English)In: Journal of Intellectual Capital, ISSN 1469-1930, E-ISSN 1758-7468, Vol. 14, no 3, 376-394 p.Article in journal (Refereed) Published
Abstract [en]

Purpose – The aim of this paper is to explore how managers are mobilising IC items when approaching their investors and analysts. To this date, there is a lack of knowledge surrounding the translation processes of IC, from corporate disclosures to the capital market. Little is known of how managers mobilise their IC in order for analysts and investors to embrace it and consider it to be a relevant part of corporate disclosures.

Design/methodology/approach – The study applies a performative approach to IC, in which framing theory is mobilized to understand the duality of financial indicators. The empirical material was collected through a case study approach, focusing on the interim reporting practices of a Swedish online gaming company. The study investigated a total of 16 earnings announcements and their accompanying conference calls in the period of 2008-2011. In addition, five interviews with top managers and financial analysts were performed.

Findings – The findings suggest that IC is highly dependent on financial indicators and can therefore not be treated as the opposite of financial capital. Instead of complementing financial capital, IC is the symptomatic quality of financial indicators, i.e. a way to make sense, contextualise and reconnect a disentangled representation with empirical phenomena.

Originality/value – This paper introduces a new way of viewing IC disclosures, expanding the knowledge and methodology in IC research. The paper also highlights the study of an important disclosure, expanding research on IC disclosures beyond annual reports. Finally, it offers practitioners additional insights in the communication of non-financials to the capital market.

Keyword
Intellectual capital, Disclosure, Performativity, Framing, Earnings announcement, Conference call, Information disclosure, Earnings
National Category
Business Administration
Research subject
Business Administration
Identifiers
urn:nbn:se:su:diva-94828 (URN)10.1108/JIC-03-2013-0037 (DOI)
Available from: 2013-10-15 Created: 2013-10-15 Last updated: 2017-12-06Bibliographically approved
2. Framing in formation: Investigating the face-to-face meetings of analysts and managers
Open this publication in new window or tab >>Framing in formation: Investigating the face-to-face meetings of analysts and managers
(English)Manuscript (preprint) (Other academic)
Abstract [en]

This study addresses the conflicting findings in the accounting literature regarding the information benefits of public earnings presentations between analysts and managers. By drawing on a perspective of analysts as framemakers, this study explores how calculative frames are enacted within these interactions. In particular, the presented findings invites a more continuous perspective of analysts’ frame-making by investigating how frames develop in times other than during its original establishment. Based on Swedish field data, this study analyses the interactions between analysts and managers through sociological communication theory. Four observations of the activities at earnings presentations are presented: (1) the difference between analysts’ proactive and reactive activities, (2) the organising of accounting deviations, (3) analysts’ collections of experience, and (4) analysts’ narration of managers. The findings illustrate that calculative frames are continuously destabilised by the accounting reports and reframed through interactions with managers. Furthermore, analysts contribute not only to framing the firm, but also to the overflowing of such frames.

Keyword
Sell-side analysts, calculative frames, earnings presentations, text-and-conversation theory
National Category
Business Administration
Research subject
Business Administration
Identifiers
urn:nbn:se:su:diva-133278 (URN)
Available from: 2016-09-05 Created: 2016-09-05 Last updated: 2016-09-08Bibliographically approved
3. Equity market interactions: Exploring the role performance of analysts at earnings presentations
Open this publication in new window or tab >>Equity market interactions: Exploring the role performance of analysts at earnings presentations
(English)Manuscript (preprint) (Other academic)
Abstract [en]

Purpose: This study contributes to the sociology of financial analysts by exploring sell-side analysts’ presentation of self and the public dramatizations of their professional roles. The study addresses the following research question: How do analysts perform their professional roles in interactions with managers, fund managers and other analysts?

Design/methodology/approach: The study adopts a dramaturgical analysis to analysts’ interactions with managers and fund managers. The empirical material includes 50 hours of direct observations of earnings presentations and 21 interviews with analysts, managers and other relevant actors.

Findings: The findings show that analysts struggle with role conflicts because they need to satisfy the contrasting demands of managers, fund managers and colleagues. Performing the role as expert critic is foremost dependant on managers’ approval yet analysts find themselves in situations where they must threaten managers’ appearances. The resulting role performance is therefore underbuilt by displays of role distance and careful preparation to meet the expectations of their audiences. In order to maintain their roles as expert critic, the analysts are dependent on both those taking their advice (fund managers) and those being reviewed (managers).

Originality/value: This study is one of few empirically rich investigations of analyst activities, analyst-manager interactions and meetings with distinct audiences. It also contributes to previous interview studies using dramaturgical analysis by offering in-depth observations of a single, distinct situated-activity system.

Keyword
Sell-side analysts, face-to-face interactions, dramaturgy, role performance, role conflict, role distance
National Category
Business Administration
Research subject
Business Administration
Identifiers
urn:nbn:se:su:diva-133280 (URN)
Available from: 2016-09-05 Created: 2016-09-05 Last updated: 2016-09-08Bibliographically approved
4. The equity broker’s dilemma: An ethnographic inquiry into reverse brokering
Open this publication in new window or tab >>The equity broker’s dilemma: An ethnographic inquiry into reverse brokering
(English)Manuscript (preprint) (Other academic)
Abstract [en]

This study addresses the overlooked equity sales function and how the contrarianism of equity brokers contributes to market activity. Based on an ethnographic study of an equity sales desk, we follow how the brokers in question developed an investment case and how they managed their personal involvement in it. Drawing on actor-network theory, this study advances the notion of the “equity broker’s dilemma”, which implies that without others’ support for the investment case, its economic potential will not be realized. However, as the number of supporters rises, the brokers also run the risk of not being rewarded and their contributions are therefore at risk. In relation to this equity broker’s dilemma, this study finds a use of accounting based on interactions with clients rather than with analysts, a practice referred to as “reverse brokering”. This process requires information that is varied, temporary, and generalized to other cases as the brokers’ propositions are displaced. The brokers’ use of accounting is based on marking distance towards the consensus on specific items only, limiting their overall risk exposure yet maximizing their conviction towards selected accounting items. This use of accounting is thus driven by the attribution of responsibility as the case materializes and an escape of any blame when it fails.

Keyword
Accounting, Actor-network theory, Brokers, Equity investments, Ethnography
National Category
Business Administration
Research subject
Business Administration
Identifiers
urn:nbn:se:su:diva-133281 (URN)
Available from: 2016-09-05 Created: 2016-09-05 Last updated: 2016-09-08Bibliographically approved

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