Accounting in Context for Australian Review -myassignmenthelp.com

Question: Discuss about theAccounting in Context for Australian Financial Review. Answer: Introduction The present paper provides an analysis and examination of the key issues discussed on an Australian Financial Review (ARF) in relation to the impression management and the subsequent impact of these practices on non-professional investors. In this context, the paper has undertaken an analysis of the article entitled The impact of information presentation order on the judgments of non-professional investors written by author Hellman et al. Article Analysis The given article has provided an in-depth understanding of the various techniques of non-impression management such as textual presentation and graphical presentation on the judgment of non-professional investors. The impression management can be stated as the methods adopted by the management in developing annual reports to induce a purpose-drive behavior such as maximizing the value of the firm. The methods can result in implementing a reporting bias in the disclosures of a business entity through manipulating the information presented to the users for achieving a desired purpose. As per the article, the impression management is a multi-faced phenomenon that is largely driven by the social psychology and aims to influence the others perceptions (Hellmann, Yeow and Mello, 2017). The use of impression management practices by the managers for driving the decisions of non-professional investors can be best described through the use of agency theory. The theory examines the relationshi p between the investors and managers that is characterized by the some contractual obligations. The theory has regarded that managers are rational decision-makers and as such they tend to adopt the managerial practices that convey good performances in an environment where their remuneration is linked to the entity growth. As such, the theory provides an overview of impression management and its use in adopting reporting bias to depict the good financial performance of a firm (Schmitt, 2015). As per the article, the techniques that can be adopted by the management for impression management are textual and graphical presentation. The use of methods is based on the fact that implicit presentation of financial information is able to influence the decisions of en d-users through exploring the cognitive constraints of human mind. The users tend to perceive negative thoughts about investing in a firm if lower performance is disclosed in the annual reports. Therefore, the managers tend to adopt such practices that maximize the value of firm in its textual presentations. Also, the use of graphics increases the visibility of key financial facts and figures and thus helps in achieving investor confidence (Hellmann, Yeow and Mello, 2017). The use of impression management practices tends to induce biasness in financial reporting and therefore there is need for developing regulations for minimizing the use of such techniques that maximizes a firm value. The non-professional investors are an important group of stakeholders that uses financial information for making decisions in relation to their investment in stock markets. In this context, the Australian Prudential Regulatory Authority (APRA) holds the responsibility of monitoring and controlling the superannuation funds of non-professional investors (Hellmann, Yeow and Mello, 2017). There is need for adopting such regulations on the corporate in order to protect the interest of non-professional investors who possess little knowledge regarding the operations of stock market. However, there are some arguments cited by various authors against the use of regulations on impression management practices. This is because the concept of impression management helps in developing an interaction between the managers and audiences. It tends to develop a reciprocal influence between management and audiences and in providing an explanation to the actions and performances of an organization. The non-professional investors can develop an adequate understanding of the financial performance of a firm through the use of impression management techniques (Rahman, 2012). The use of impression management can result in perceiving a higher financial growth of an entity based on the use of attractive textual and graphical presentations. In this context, it is essential that accounting standard setting boards such as IASB and AASB develops and implements necessary regulatory practices on a firm so that the interest of non-professional investors can be protected. The objective of the regulations would be securing the interests of both professional and non-professional investors. The compliance with the regulations should be monitored by the board and the government on a regular basis (Tessarolo Pagliarussim and Luz, 2010). Conclusion It can be said from the overall analysis of the article and the various views regarding the impression management that it should be used by business entities only for developing a better interaction with the target audiences. The technique should not result in developing biasness in corporate reporting through manipulating the information for achieving personal benefits such as profit maximization for shareholders. References Hellmann, A., Yeow, C and Mello, L. 2017. The influence of textual presentation order and graphical presentation on the judgments of non-professional investors. Accounting and Business Research 47 (4), pp. 455470. Rahman, S. 2012. Impression Management Motivations, Strategies and Disclosure Credibility of Corporate Narratives. Journal of Management Research 4(3), pp. 1-14. Schmitt, D.B. 2015. Advances in Accounting Behavioral Research. Emerald Group Publishing. Tessarolo, I., Pagliarussi, M and Luz, A. 2010. The Justification of Organizational Performance in Annual Report Narratives. Brazilian Administration Review.