Forward-looking statements in annual reports : how is futurity expressed?

Abstract

In the US, regulations on the writing of “Management's Discussion and Analysis of Financial Condition and Results of Operations” (MD&A) are being strengthened after the eruption of numerous financial scandals (e.g. Enron). For this reason, the traditional backward-looking reporting model gave way to a forward-looking one that is more reader-oriented. In this study, an investigation of the lexico-grammatical features used by organizations of different financial capabilities to present prospective information in the MD&A was conducted. Using Bhatia’s (2004) Critical Genre Analysis and an adapted legitimation taxonomy based on Castello and Lozano’s (2011) and Beattie, McInnes, and Fearnley’s (2004) studies, the lexical verbs, tenses, and aspect used by the top three (Exxon Mobil, Walmart, Chevron) and bottom three (Nash-Finch, KeyCorp, Molina Healthcare) companies on the 2012 Fortune 500 list were compared. The quantitative and qualitative findings showed that the linguistic practices of the top-performers and bottom-performers were largely similar. In terms of rhetoric types, strategic rhetoric dominated the corpora while dialectic and institutional rhetoric came in second and last respectively. As for lexical verbs, activity, existence, and occurrence verbs were found to be consistently used across rhetoric types and temporal spaces. With regard to tense and aspect, it was found that constructions that are typically used to refer to the present, such as the simple present and present progressive tenses, were more commonly used to express futurity rather than the simple future tense, modals, or conditionals. Although resembling features were shared by both groups, a few findings from the top-performers’ corpus did suggest that the top-performers were more assertive in their creation of possible futures.

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