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Impression management: graphical representation in integrated reports of state-owned entities in South Africa.

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2021

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Abstract

Graphical representation in the integrated report is a form of voluntary disclosure, by nature may be subject to bias or distortion by the managers of the preparing entities to yield favourable information or reduce the gravity of the financial information to the stakeholders. This situation prevails when limited evidence exists on how graphical representation may misrepresent the information in many ways, such as the types of graphs selected, the frequency of graphs presented, the quality of graphs presented, and how graphs are measured. Presenting the evidence in respect of these ways, analysing the patterns, frequencies, selectivity, quality, and distortion might alert stakeholders to pay attention to this information when reading these reports. The magnitude of maladministration and corruption in South Africa indicates that impression management (favourable bias) may hide the corruption or be perceived as performing well. The study addresses the usage of graphical representation in integrated reports of state-owned entities (SOEs) in South Africa and determines whether impression management is present. The quantitative research methodology was applied in undertaking this research study due to the objectivity of the method, following the descriptive type of research design. The positivist research paradigm was followed, with its primary focus to determine the genuine truth through a scientific method and objectivity. The study focused on the five years from 2017 to 2021 for entities listed in Schedule 2 (21 entities) of the Public Finance Management Act (PFMA). Only 15 of the 21 entities had integrated reports for the period 2017 to 2020, and only six of the 15 had integrated reports in 2021. Therefore, these 15 SOEs were selected as the sample with a limitation of nine SOEs’ integrated reports not published in 2021. Using statistics, a trend analysis strategy was adopted to analyse and present the results. The findings are presented as graphs – with percentages, absolute numbers, and averages. The study found that all SOEs use graphs, selectivity is present. Other graph type is the most common graph used by SOEs, followed by Column graphs. SOEs are more likely to report on favourable information than unfavourable. Graph distortion was present in 75.8% of graphs. It is recommended that guidelines and standards of good graphs are adhered to, and entities to report on relevant and key information to the users of the integrated reports and not following a positive trend bias.

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Masters Degree. University of KwaZulu-Natal, Durban.

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