The tone of business model disclosure: an impression management analysis of the integrated reports

The rising emphasis on the business model (BM) as a reportable element reflects the view it constitutes one of the key starting point for investors’ analysis. In spite of this, recent academic and professional studies describe current reporting on BM as uninformative: too optimistic, generic and incomplete. The International Integrated Reporting Council claims that these limitations may be overcome by mean of the so-called “Integrated Report” (IR), a voluntary report which is expected to offer a complete and balanced representation of how organizations create value by mean of their BM. Drawing on impression management (IM) framework, the paper investigates the informativeness of BM disclosure by focussing on the tone of the information provided by European early adopters. By performing an in-depth manual content analysis and a multivariate statistical analysis, the paper shows that a positive tone of BM disclosure is significantly associated with weak corporate governance, bad performance and low verifiability of the disclosure itself. Our findings support IM hypotheses of managers using disclosure to be perceived favourably by their audience. This evidence has relevant implications for both accounting scholars and practitioners, since it questions the role of the IR in improving reporting on BM.