Managerial Responses to Performance Downturns: Linguistic Deception as Impression Management

Although the study of impression management has gained attention over time, relatively limited work has been conducted in understanding deception as an impression management strategy. We present a study of the Management Discussion and Analysis statements (MD&A) of 10-K reports of firms experiencing performance downturns and find that the tendency of strategic leaders to engage in deceptive impression management increases with the degree to which a firm's performance drops relative to the prior year. We also study the effects of a firm's competitive position and the overall industry competitive complexity on the relationship between performance downturn and deceptive impression management.