An exploratory study of honesty in managerial performance reporting: evidence from Ghana

This exploratory study examines the concept of Honesty (H) in Managerial Performance Reporting (MPR) developing the concept of Honest Managerial Performance Reporting (HPR). It identifies the level of honesty in manager’s performance reporting behaviour and how HPR influences aspects of Firm Performance (FP). The work of Yang (2009) and Evans et al. (2001) provide academic consideration of this area, including insights into how this area may be studied. Practical, real-world examples of such issues are numerous, but the ‘Enron case’ is probably the most well-known (Ndofor et al. 2015). The study utilises datasets of managers, managerial performance reports and companies (Ghana Club 100) in its work and applies a mixed method approach using a variety of research instruments. Several theoretical approaches provide the bedrock for this study and a lens for examining different dimensions of the concept of honesty in MPR. These are Classical agency theory (Jenson & Meckling, 1976), a multi-actor stakeholders model that emanates from Stakeholder theory (Freeman 1984, Yang, 2009), Impression Management (Goffman, 1959), Legitimacy (Deegan, 2002) and Institutional (DiMaggio & Powell, 1983) theories. The thesis explores the level of and factors that influence honesty in managerial performance reporting (HPR). It also determines if HPR has any implication on Firm Performance (FP). From this, four areas of endeavour are formulated, and hypotheses developed to address the issues in each area, and the quest for answers and conclusions to these specifications are pursued. Specifically, the study uses 1) Four experimental constructs to test manager’s voluntary preference for HPR. 2) 265 structured questionnaires to explore the variables affecting HPR. 3) Statistical analysis to examine the relationships between HPR and FP. 4) Vignettes to document HPR practices among Ghana Club 100 companies. The results are the outcomes of the hypotheses and in turn, address the research issues that answer the primary research question leading to conclusions such as: - a) Regarding levels of honesty, managers are partially honest in MPR. b) HPR is affected by a range of factors that include environmental, organisational, economic and individual variables. c) The nature and level of relationship of HPR on FP is that HPR has a significant positive relationship with FP. The clear contribution of this study is that: - a) It uses managers rather than students in HPR studies confirming that managers voluntarily prefer HPR. b) It confirms that HPR is mainly influenced by factors within the control of ‘decision-active’ stakeholders. c) It demonstrates that HPR can be improved if the pay-off for performance related bonuses is deferred rather than paid immediately. d) It provides evidence that HPR has a significant and positive effect on FP. These contributions provide new insight into Managerial Performance, MPR, HPR and the relationship with firm performance, while recognising some limitations. It also makes worthy contributions to our understanding of new contexts