Empirical research on the nature of narrative reporting has focused on impression management as an explanation for the style and content of narrative reports. Companies may offer voluntary disclosures to offset the potential for adverse selection caused by lack of disclosure particularly where the market is aware of the existence of bad news. Theoretical models have been developed to demonstrate that the relative extent of corporate disclosure may be related to information costs. This paper links these theoretical perspectives by showing that factors representing the management need, or desire, for corporate visibility are significantly associated with the extent of voluntary disclosure and add to explanations based on reducing information costs.

As listed companies move increasingly into global markets, some recognize a wider spread of stakeholders by adapting corporate communications to suit those markets. One approach is to translate the annual report into a language more familiar to the wider stakeholder group. The decision to offer such a translation may be seen as an aspect of impression management in similar vein to the use of graphs or illustrations. This paper shows that companies providing translations in a second language are also more active in voluntary reporting. The findings offer a contribution to the literature of impression management by identifying managerial perception of readership as a significant factor in determining the extent of voluntary disclosure.

This paper analyzes voluntary disclosure in the annual reports of Greek listed companies at the start of a period of major expansion in the Athens Stock Exchange (ASE). The analysis is based on annual reports of 1997 because that year marked a significant change in the ASE. The general price index of the ASE increased by 60% in 1997 over the previous year. There was a partial privatization of the stock exchange, accompanied by major amendments to stock exchange legislation. Shortly before, or during, 1997 a large number of companies entered the market for the first time, while many of those already listed raised new capital from the capital market. It was a time when the Greek business community began to recognize the challenges of the single currency and international markets (ibid.).

The paper reviews prior literature in the next section. That is followed by a description of the legislation governing annual reports in Greece. Data and research method are described next, followed by results and analysis. The paper concludes that impression management leads to increased transparency of disclosure where a company is seeking to reach a wider international readership.

Stanton and Stanton (2002) suggest that the style and content of the annual report reflects a division between the pursuit of legitimacy and corporate social responsibility on the one hand, and political economy, image management and marketing interpretations on the other. International pressures influence companies to adopt a global market culture rather than a specific country culture. Where companies have freedom within a legislative framework they will experiment with accounting practices and presentation. To understand the disclosure strategy of outward-looking companies within a country it may be necessary to identify the effects of international pressures and influences. Prior research has shown that voluntary disclosure by French companies is affected by proprietary costs, information costs and media visibility. Cooke (1989), Raffournier (1995) and Depoers, 2000 and Depoers, 2000, among others, have indicated the relative influence of foreign activity on voluntary disclosure.

Evidence from So and Smith (2003) points to the importance of matching the methods of presentation of information to the characteristics of the decision maker, and the potential for interaction. Companies with a global focus, measured by the number of listings on a foreign stock exchange, voluntarily provide higher levels of both forward looking and historical non-financial disclosures.

It has been argued that managers use annual reports as part of the process of creating an image to influence external stakeholders. Visual images are integral elements within corporate reports; we hypothesise by analogy that the language of presentation would have a similar constitutive effect.

In contrast with the practice in developed capital markets such as those of the US or the UK, the publication of an annual report is not prescribed by the ASE Law, or any other law, or any accounting standard or professional recommendation. However, listed companies publish reports annually. These include the mandatory financial statements and notes prescribed by the legislation, plus additional voluntary information. These annual reports are provided to shareholders in the general meeting, to satisfy legal obligations, and to financial analysts on request. Publication of an annual report in Greece is an established practice that could be seen as reflecting an implicit code of good practice rather than a requirement of regulation.

The publication requirements for the financial statements are prescribed in detail by the Law 2120/20. This company law was first approved in 1920 and has been updated subsequently. The financial statements should be published and submitted to the Ministry of Trade at least 20 days before the general meeting (article 43b). The general meeting should be held within six months of the year-end (article 25a). The Board of Directors is responsible for publishing the balance sheet, profit and loss account and the table of appropriation of profits in the Government Gazette (Issue of Societe Anonyme Companies and Limited Liability Companies) at least 20 days before the general meeting. These statements should also be published in a daily political newspaper and in a financial newspaper (article 26, para 2). If the company is not located in the prefecture of Athens, then the financial statements should be published in a local newspaper (article 26, para 2). Financial statements should be ready and available for the shareholders at least 10 days before the general meeting (article 27, para 1). Financial statements, after their approval from the general meeting, should be submitted to the Ministry of Trade with a statement of the proceedings. These statements should be signed by the chairman, the executive director and the chief accountant.

The management report has been criticized on grounds of limited informative value as a result of vagueness. The source of vagueness in requirements refers mainly to the relative lack of specific criteria to guide disclosure decisions. That affects the quality and quantity of information. Such vagueness is seen in regulations on segmental reporting, disclosure of corporate prospects, and exclusion clauses permitting managerial remuneration to be omitted if it reveals the identity of the recipient. Because the regulations are vague, this is effectively voluntary information. The Capital Markets Committee (CMC) has recognized many of the inadequacies of the existing regulation in the issues of transparency and disclosure of information caused by insufficient legislation. A committee coordinated by the CMC has the task of improving information matters. Examination of forward-looking information and management remuneration are included in its current agenda. That justifies further the particular importance of investigating disclosure items when regulation is inadequate.