Credibility of Financial Reporting Communication Between Investors and Management: An Exploratory Study

Abstract

the purpose of the paper is to examine the role of
credibility in achieving successful communication processes in
financial reporting and to suggest a theoretical framework based
on source credibility theory that can be used to design research
exploring credibility as a dimension of communication in
financial reporting. The research approach adopted here is a
comprehensive, interdisciplinary review drawing on sources
from academic and professional communication, financial
reporting, and credibility studies. The framework proposed
drives researchers towards considering the financial reporting
process holistically, examining senders, receivers, channels and
noise, and not simply factors but levels of persuasion and changes
in attitude. If financial reporting is the product, and users are the
audience, source credibility theory potentially offers another
means of understanding why audiences might be more persuaded
by one means of financial reporting than another. This paper is
the first attempt to call the attention of financial reporting
scholars to the area of communication through studying the
credibility of communication and its effects on the successfulness
of communication process. Also, the paper contributes to the
debate relating to the understanding of the factors and
dimensions of comprehensive credibility that includes all parties
involved in the financial reporting communication process.