Inverted U-shaped relationships between managerial ownership and impression management: evidence from China before and during COVID-19 pandemic

Impression management refers to controlling or shaping the information disclosed to affect readers’ interpretations. Managers may manipulate the tone and length of financial reports to manage stakeholders’ expectations. This exploratory study examines the impact of managerial ownership on impression...

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Main Authors: Kwok Yip Cheung, Chung Yee Lai
Format: Article
Language:English
Published: Taylor & Francis Group 2025-12-01
Series:Cogent Business & Management
Subjects:
Online Access:https://www.tandfonline.com/doi/10.1080/23311975.2025.2458167
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author Kwok Yip Cheung
Chung Yee Lai
author_facet Kwok Yip Cheung
Chung Yee Lai
author_sort Kwok Yip Cheung
collection DOAJ
description Impression management refers to controlling or shaping the information disclosed to affect readers’ interpretations. Managers may manipulate the tone and length of financial reports to manage stakeholders’ expectations. This exploratory study examines the impact of managerial ownership on impression management using Management Discussion and Analysis (MD&A) reports contained in annual reports for all A-shares listed in China from 2018 to 2021. In total, 5279 firm-year observations were collected from China. The results suggest that managerial ownership has a significantly inverted U-shaped relationship with impression management, indicating that executives who hold ownership in a company are more likely to engage in impression management. However, beyond 31% of managerial ownership, the effectiveness of oversight quality on impression management is strengthened, leading to decreased levels of impression management. This relationship is more prevalent during the COVID-19 pandemic (2020 and 2021). The findings of this study provide policy implications not only for China but also for Asian countries with similar institutional backgrounds. For example, managerial ownership should not be restricted to below 31%. Additionally, the findings provide additional mechanisms for investors to identify impression management during unstable financial periods.
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spelling doaj-art-913705668d8f4ce4ac0c4313f5e9a7cc2025-02-05T09:45:47ZengTaylor & Francis GroupCogent Business & Management2331-19752025-12-0112110.1080/23311975.2025.2458167Inverted U-shaped relationships between managerial ownership and impression management: evidence from China before and during COVID-19 pandemicKwok Yip Cheung0Chung Yee Lai1Department of Accounting, The Hong Kong University of Science and Technology, Hong Kong, Hong KongDepartment of Education, Brittany Université, Paris, FranceImpression management refers to controlling or shaping the information disclosed to affect readers’ interpretations. Managers may manipulate the tone and length of financial reports to manage stakeholders’ expectations. This exploratory study examines the impact of managerial ownership on impression management using Management Discussion and Analysis (MD&A) reports contained in annual reports for all A-shares listed in China from 2018 to 2021. In total, 5279 firm-year observations were collected from China. The results suggest that managerial ownership has a significantly inverted U-shaped relationship with impression management, indicating that executives who hold ownership in a company are more likely to engage in impression management. However, beyond 31% of managerial ownership, the effectiveness of oversight quality on impression management is strengthened, leading to decreased levels of impression management. This relationship is more prevalent during the COVID-19 pandemic (2020 and 2021). The findings of this study provide policy implications not only for China but also for Asian countries with similar institutional backgrounds. For example, managerial ownership should not be restricted to below 31%. Additionally, the findings provide additional mechanisms for investors to identify impression management during unstable financial periods.https://www.tandfonline.com/doi/10.1080/23311975.2025.2458167Managerial ownershipimpression managementCOVID-19pandemicChinaBusiness
spellingShingle Kwok Yip Cheung
Chung Yee Lai
Inverted U-shaped relationships between managerial ownership and impression management: evidence from China before and during COVID-19 pandemic
Cogent Business & Management
Managerial ownership
impression management
COVID-19
pandemic
China
Business
title Inverted U-shaped relationships between managerial ownership and impression management: evidence from China before and during COVID-19 pandemic
title_full Inverted U-shaped relationships between managerial ownership and impression management: evidence from China before and during COVID-19 pandemic
title_fullStr Inverted U-shaped relationships between managerial ownership and impression management: evidence from China before and during COVID-19 pandemic
title_full_unstemmed Inverted U-shaped relationships between managerial ownership and impression management: evidence from China before and during COVID-19 pandemic
title_short Inverted U-shaped relationships between managerial ownership and impression management: evidence from China before and during COVID-19 pandemic
title_sort inverted u shaped relationships between managerial ownership and impression management evidence from china before and during covid 19 pandemic
topic Managerial ownership
impression management
COVID-19
pandemic
China
Business
url https://www.tandfonline.com/doi/10.1080/23311975.2025.2458167
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AT chungyeelai invertedushapedrelationshipsbetweenmanagerialownershipandimpressionmanagementevidencefromchinabeforeandduringcovid19pandemic