Impression management tactics in Covid-19 related disclosures: a study on the annual reports of Bangladeshi listed insurance companies

1. Introduction

Covid-19 pandemic as a worldwide health crisis continues to hurt individuals, society, businesses and the global economy. Because of the life-threatening nature of the disease, people worldwide had gone through several changes in both their public and private lives, like wearing face masks and maintaining social distancing. In most of the countries, several rounds of lockdown were imposed. Business organizations, schools, entertainment centres and many other public places were closed to control the spread of the virus. All these became the “new normal” of our day-to-day dealings. However, because of these restrictions, various economic activities were significantly shrunk worldwide. According to Jackson et al. (2021, p. 1):

The World Health Organization (WHO) first declared COVID-19 a world health emergency in January 2020; on March 11 it announced the viral outbreak was officially a pandemic, the highest level of health emergency. Since then, the emergency evolved into a global public health and economic crisis that affected the $90 trillion global economy beyond anything experienced in nearly a century.

In many ways, this pandemic has “… devastated the global economy, which has rendered many of the world's population impoverished” (Vitenu-Sackey and Barfi, 2021, p. 32). The lockdowns in various scales and forms have resulted in “extended economic burden and socio-economic insecurity” (Haque et al., 2021, p. 75). Although most business sectors are feeling the havoc of the Covid-19, insurance sector has suffered immensely due to sharp slowdown in economic activities. Shaw (2020) mentioned that a severe economic downturn has undermined the growth of insurance businesses (both life and general), contracted insurable exposures and reduced profitability. The fallout from the Covid-19 outbreak includes a surge in claim settlement for mortality, morbidity, contraction insurance sales and increased business failures. Haque et al. (2021) noted that the adverse effect of Covid-19 on the insurance industry of Bangladesh is also significant. The impact was negative on insurance premium, insurance density and penetration. The authors concluded that the pandemic has contributed to the “… contraction of the insurance sector” (Haque et al., 2021, p. 81). The industry, along with its large groups of stakeholders, badly suffered from this crisis.

The main objective of this study is to explore how the insurance companies of Bangladesh have communicated this crisis to their stakeholders. As the Covid-19 pandemic is a recent phenomenon, up to now, few studies (e.g. Albitar et al., 2021; Carnegie et al., 2022; Crovini et al., 2022; Elmarzouky et al., 2021; Gelmini et al., 2021) were conducted on corporate disclosure on the Covid-19 crisis. Prior studies on corporate crisis communication evidenced that companies use different communication strategies to impress and manage stakeholders in crisis situations (e.g. Cooley and Cooley, 2011; Coombs, 2007; Kim and Liu, 2012). As Covid-19 came as a global crisis that affected the economic sector worldwide, it is expected that an examination of the impression management strategies in the related disclosures may come up with interesting findings. By exploring the Covid-19 disclosure practices of the companies of a highly affected industry of an emerging economy, this study will add to the existing scant accounting literature on this aspect. We also contribute to the corporate crisis communication literature by applying discourse analysis to uncover the meaning of the text disclosures and interpret the findings through the lens of impression management theory following the impression management framework proposed by Caliskan et al. (2021).

The rest of the paper proceeds as follows. In the next section, we have undertaken a review of the accounting research related to the Covid-19. Section 3 provides a brief contextual summary of Bangladesh economy in general and the insurance industry in particular. After that, the theoretical perspective of this study is articulated in Section 4. Section 5 explains the research methods. In the following section, the findings and analysis of the study are presented. Finally, we conclude in Section 7.

2. Covid 19 and accounting research: literature review

As Covid-19 is a recent phenomenon, there are very few studies conducted in accounting literature covering the impact of Covid-19 on accounting/audit practice, accounting education, stock market performance and corporate disclosures.

Papadopoulou and Papadoupoulou's (2020) empirical study investigated the challenges faced by the accountants of Greece during the pandemic. The authors point out, that accountants had to change the working style during this challenging time and abruptly implement the plans. They had to work for more hours to meet the deadlines. Because of the suspension of operation of many clients, the income of the accountants decreased. As many clients did not have tools for distant connections, communication between the clients and the accountants decreased. Also, the accountants suffered from many job-related stresses. The theoretical study of Albitar et al. (2020) focused on the challenges that audit firms may face in ensuring audit quality in this pandemic situation. According to the authors, the main issues that need special attention include audit fees, going concern assessment, human capital management, audit procedures and remuneration of the audit personnel. As work from home will be the “new normal”, extensive investment in digitalization programs is essential. The authors proposed the government to make the compliance requirements flexible during the pandemic.

Some authors focused on accounting education during the Covid-19 pandemic. Bourmistrov (2020), in a self-ethnographic essay, proposed including “scenario planning” in accounting education to develop skills to deal with uncertain situations. In Spraakman's (2020) essay, the author emphasized that the current status of management accounting education is faulty as the textbooks do not teach the students how to respond to quick changes, such as the Covid-19 pandemic. Both of these authors called for a change in accounting teaching. In a reflexive essay, Parker (2020) criticized the highly commercialized “accounting-based private sector business model” followed by the universities of Australia. The author calls for a change in this kind of orientation.

Nguyen et al. (2021) investigated how the Covid-19 outbreak influenced Vietnamese companies' stock market return and liquidity. The authors found that the daily growth in the number of Covid-19 cases had a negative effect on the stock market return and liquidity. In their study, Karim et al. (2021) examined the impact of the Covid-19 outbreak on the financial health and liquidity of Bangladeshi banks. The authors concluded that both the liquidity position and financial health of the banks deteriorated during this pandemic.

The studies that examined the Covid-19 related corporate disclosure are still at the nascent stage. The disclosure studies cover risk disclosures (Carnegie et al., 2022; Crovini et al., 2022), corporate social responsibility (CSR) reports (Albitar et al., 2021), reporting uncertainty (Elmarzouky et al., 2021) and corporate rhetoric (Gelmini et al., 2021). Carnegie et al. (2022) explored Covid-19 related risk disclosures in the annual reports of the Australian (Victorian) universities. The authors found that the disclosures are mostly neutral and qualitative. The quality of disclosure is low. The study of Crovini et al. (2022) pointed out a few conceptual considerations of how dynamic accountability and risk reporting could be connected during and after the pandemic. The authors recommended that organizations understand the changing information needs of the stakeholders during this time and link risk reporting to their business models. Drawing from the United Kingdom (UK) evidence, Albitar et al. (2021) suggested that Covid-19 pandemic created additional pressure on companies to show enhanced ethical and social behaviour through CSR disclosures. They found that when CSR reports had gone through an assurance process, UK firms disclosed more on CSR activities, and it would act as “insurance-like” tool to protect firms against negative externalities of Covid-19 crisis. Moreover, the involvement of big accountancy firm in the assurance process of CSR reports produced more CSR disclosures than others. Researchers also studied whether there is an association between Covid-19 disclosure and the uncertainty in annual reports. Using UK Financial Times Stock Exchange (FTSE) – All share nonfinancial firms, Elmarzouky et al. (2021) argued that Covid-19 disclosures varied from industry to industry and there was a positive relationship between Covid-19 disclosures and the uncertainty in annual reports. An exceptional study in the domain of Covid-19 related corporate disclosure is that of Gelmini et al. (2021). The study goes beyond the statistical significance type work and employs the frameworks of Higgins and Walker (2012) and Merkl-Davies et al. (2011) to understand the importance of rhetoric in corporate communication and its significance in accounting and accountability. Self-assessment and emotional tone are evident in the linguistics of Italian corporate reports during Covid-19 pandemic. We posit our paper in this domain to realize the importance of corporate communication in the insurance industry of an emerging economy-Bangladesh.

Although insurance industry is one of the worst affected industries during Covid-19 pandemic, there is very little evidence in this context. Gelmini et al. (2021) included 20 bank and insurance firms in their 190 sample firms. They also signified the importance of Covid-19 disclosures, at least at the rhetoric level, for bank/insurance firms. Particularly, the study argued that emotion content like pathos (which contains 12% of the total rhetorical content) is higher for bank/insurance firms. The study of Alshammari and Altarturi (2021) provided a detailed evidence of Gulf insurance business during the Covid-19 pandemic. However, the study only highlighted the regulation of insurance business. Drawing evidence from the gulf region, the study suggested that insurance regulatory and supervisory authorities in the region issued additional guidelines during the Covid-19 pandemic to protect the interest of policyholders and to ensure the stability of insurance industry during this volatile period. Although these studies are important to understand the impact of Covid-19 in the insurance industry, it is not possible to get a clear view how Covid-sensitive industry like insurance communicate in the corporate reports the acts and measures of crisis management albeit at the rhetoric level. There is no study in the context of an emerging economy highlighting the Covid-19 disclosures of an industry that is highly exposed like insurance to this pandemic. Insurance industry in Bangladesh has received very minimum attention from academic researchers even though many aspects of the insurance industry are yet unknown. Ullah et al. (2019) is an exception here. They covered 277 listed insurance company-years in Bangladesh for the period of 2008–2014 and found that board independence and female directors had positive associations while the managerial ownership had negative association with the CSR disclosures. But the study is not relevant for understanding the Covid-19 impact on corporate disclosures. We aim to fill this gap. By applying the discourse analysis on Covid-19 related disclosure of the insurance companies of a developing economy (Bangladesh), this study contributes to the scant literature.

3. Overview of Bangladesh economy and insurance industry

Over the last decade, Bangladesh has shown remarkable economic progress maintaining a constant Gross Domestic Product (GDP) growth of over 6%. Among the South Asian economies, Bangladesh is doing exceptionally well in terms of various economic and social indicators like increasing export volume, reducing the unemployment rate, rising per capita income, bolstering foreign exchange reserve, declining dependency on foreign loans and aids, improving health and life expectancy, increasing literacy rate, climbing in human development index, and plummeting poverty rate and gender inequality, etc. The success tale of Bangladesh is ornamentally described as a “miracle” (Sawada et al., 2017; Yousuf, 2021). Since March 2020, the country is badly affected because of the havoc of Covid-19, which has slowed down its socio-economic progress. According to World Bank (2020) national account data, the GDP growth rate in 2019 was 8.15%, which was drastically decreased to 2.38% only in 2020. The spread of Covid-19 and lockdown restrictions generated significant instability and uncertainty across many business and non-business sectors. The insurance industry is highly affected among those sectors because of its direct and indirect linkage to nearly every other sector. Only in the 2nd quarter (April–June) of the financial year 2020, the gross written premium in the Bangladeshi general (non-life) insurance business was decreased by 20% (John, 2020). The impact was also severe on health and life insurance businesses due to increasing claim settlement obligations and shrinking premium collection (LankaBangla, 2020). Despite being one of three actors in the financial markets of the flourishing Bangladesh [two others are banks and stock markets], this sector has historically been neglected. Compare to Bangladesh economy, the size and coverage of the insurance industry were already very small. The overall insurance penetration (ratio of premium underwritten in a year to the GDP) in Bangladesh is only 0.57% in 2018, which is well behind the average of 3.3% of the emerging economies (Ahmad, 2021). Over the last decade, the overall insurance penetration is continuously decreasing (Rashid, 2020) and became nearly half from the same [1.13%] in 2010 (LankaBangla, 2020). The insurance market has not expanded much due to mistrust and lack of awareness among Bangladeshi people and businesses towards insurance products (Das, 2021). At present, there are 32 life insurance companies (including a state-owned life insurance corporation, called “JibonBima Corporation”) and 46 general (non-life) insurance companies (including a state-owned general insurance corporation, called “SadharanBima Corporation”) operating in Bangladesh. Among them, 51 insurance companies are listed in the Dhaka Stock Exchange (the largest stock exchange of Bangladesh). Since 2011, the regulatory body of insurance companies in Bangladesh is the Insurance Development and Regulatory Authority (IDRA) (Ahmed, 2021).

4. Theoretical perspective: impression management

Impression management theory has its origin in social psychology. Impression management is the “… conscious or unconscious attempt to control images that are projected in real or imagined social interactions” (Schlenker, 1980, p. 6). Though impression management theory was primarily developed for explaining the individuals' behaviour, it was later applied extensively to explain organizational situations (Hoogheimstra, 2000). Hoogheimstra (2000, p. 60) states, “… organizations can try to influence people's perceptions of the company by using self-representational devices”. Impression management theory, now a day, is used extensively in the research on corporate reporting and accountability (e.g. Fialho et al., 2021; Haji and Hossain, 2016; Hoogheimstra, 2000; Hossain et al., 2021; Merkl-Davies et al., 2011; Sandberg and Holmlund, 2015; Caliskan et al., 2021). Impression management strategies help management repair and maintain the company's desired image (current and potential) (Bolino et al., 2008; Florio and Sproviero, 2021; Mazumder and Hossain, 2019). Thus, the stakeholders get an impression that the activities and performance of the companies are in line with their expectations (Leary and Kowlaski, 1990; Mazumder and Hossain, 2019; Rahman, 2012).

Different authors identified several impression management strategies that corporate management uses in the corporate narratives to create a positive image for the company. For example, Brennan et al. (2009) found that companies use impression management tactics such as syntactic manipulation, rhetorical manipulation, attribution to organizational outcomes, thematic manipulation, selectivity, emphasis on visual presentations and performance comparison. Higgins and Walker (2012) identified that companies use Aristotelian rhetorical expressions such as ethos, pathos and logos to manage the impression of the stakeholders. Sandberg and Holmlund (2015) found that companies apply different types of presenting actions (such as description, praise, admission and defence) and writing styles (such as subjective, positive, vague and emotional) to manage stakeholders' impressions. In a recent study, Caliskan et al. (2021) identified that the company management uses three types of tactics to manage impression. These include assertive tactics, performance-oriented tactics and defensive tactics.

This study uses the tactics identified by Caliskan et al. (2021) as our analytical framework. The reason behind choosing these organizational impression management tactics as the analytical framework is that the authors identified these tactics by a thorough review and analysis of several important pieces of literature on impression management strategies. The details of these impression management tactics classifications are discussed in the next section.

5. Research method

Given the nature of our research objective, we have conducted a discourse analysis of the Covid-19 related narratives in the annual reports of the insurance companies of Bangladesh. As this study is qualitative in nature, we adopted an interpretivist perspective following the impression management strategies identified by Caliskan et al. (2021).

6. Findings and interpretations

It was seen that Covid-19 related disclosures in the annual reports of the insurance companies are mostly presented in sections such as Chairman's report, Director's report and CSR related reports. Out of the 27 companies in the sample, 5 companies did not mention anything about the Covid-19 issue.

Most of the sample companies highlighted the impact this pandemic on the world economy as well as Bangladesh economy. In the following example, the company highlighted the impact of Covid-19 on the world economy:

In the following example, the company described the impact of Covid-19 pandemic on Bangladesh economy:

In both of these examples (1 and 2) the companies emphasized that the economy has suffered a lot due to this pandemic. These companies used expressions with negative connotations [such as “more negative impact”, “imperilling the significant progress”, “suffering badly”, “force down the GDP”] in order to highlight the devastating situation that resulted from the pandemic. Companies tried to highlight this pandemic as a “crisis”. Fearn-Banks (1996, p. 1) defined crisis as: “… a major occurrence with a potentially negative outcome affecting an organization, company, or industry, as well as its publics, products, services or good name”. Here, the issue of pandemic was considered as a crisis by highlighting its negative effect on economy and business.

In both of these examples, the companies presented the information with the help of some quantitative data (say, GDP, growth and number of deaths). According to Higgins and Walker (2012), presenting information with data enhances integrity and clarity of the information. Quantitative information enhances the integrity of the communicator (Higgins and Walker, 2012). In example 2, by highlighting the number of deaths, the company tried to trigger the emotions of the readers. All these are considered as attempts to manage impression (Higgins and Walker, 2012; Hossain et al., 2017).

Companies also emphasized on the impact of Covid-19 on the insurance sector:

In examples 3 and 4, the companies highlighted the insurance industry as a “victim” of the Covid-19 crisis. In example 3, the company emphasized on the “seriousness” of the situation by using several “qualifiers” [A qualifier represents “an additional word to add emphasis to a keyword” (Brennan et al., 2009, p. 797)]. They highlighted that maintaining the turnover was “really” challenging. Also, Covid-19 was mentioned as “totally” new type of crisis which created “the worst year in the history of mankind”. Since no year-wise comparative picture is given here by the reporting company, merely claiming a year “the worst year” is an exaggeration by using qualifiers. According to Brennan et al. (2009) qualifiers are impression management tools. However, in many ways, the expressions in example 3 are rhetorical in nature. Though the company is expecting that the situation will improve because of governmental initiatives, no detail description of these initiatives was presented. This is “mere rhetoric” (Hossain, 2017). However, in example 4, the company tried to present some facts and causes (depressed trade and ban on transport) for the decline of growth throughout the industry. According to Higgins and Walker (2012), presentation of facts and logics can enhance the integrity of the communicator and thus stakeholders' impression is managed. But the example 4 overtly emphasized on histories without providing further evidence. These are nothing but some vague expressions to impress the readers of the report.

It was found that the companies used several impression management tactics [as identified by Caliskan et al. (2021)] in these annual reports. These are described here.

7. Discussion and conclusion

Covid-19, the global pandemic, appeared as a massive crisis for business organizations all over the world. Researchers across the discipline studied Covid-19 and its impact. Accounting scholars also explored the issue of Covid-19. However, studies on Covid-19 related corporate disclosures are very limited in accounting research. While the extant research covered issues of risk disclosures (Carnegie et al., 2022; Crovini et al., 2022), CSR reports (Albitar et al., 2021), reporting uncertainty (Elmarzouky et al., 2021) and corporate rhetoric (Gelmini et al., 2021), they failed to address the Covid-19 disclosures in the context of worst hit industries like insurance sector. This paper aimed to fill this gap. In particular, this study explored how the insurance companies of an emerging economy reported Covid-19 issue to their stakeholders by applying discourse analysis on the corporate narratives. By doing so, this study is parting with studies on corporate rhetoric (Gelmini et al., 2021). But Gelmini et al. (2021) provided evidence on the use of Covid-19 related rhetoric by Italian firms in different sectors. We have explored the insurance sector as it is believed to be hit hard by the pandemic.

Discourse analysis is not new in accounting research. Prior studies on corporate disclosures (e.g. Ahmad and Hossain, 2019; Haji and Hossain, 2016; Hossain et al., 2017, 2021; Mazumder and Hossain, 2019) conducted discourse analysis to show how impression management strategies were employed by the companies to manipulate the readers of corporate reports. Earlier studies used different impression management framework. For example, Brennan et al.'s (2009) framework (five different impression management strategies, e.g. rhetorical manipulation, thematic manipulation, selectivity, emphasis in visual presentation and performance comparisons) was used by Ahmad and Hossain (2019), Haji and Hossain (2016), and Mazumder and Hossain (2019). Higgins and Walker's (2012) rhetorical expressions (such as logos, pathos and ethos) were used by Hossain et al. (2017). Recently, Hossain et al. (2021) used Sandberg and Holmlund's (2015) organizational impression management tactics (description, praise, admission, defence and writing styles). The novelty of the current study is that it adopted the impression management tactics identified by Caliskan et al. (2021). Particularly, the framework shows the use of fourteen impression management strategies under three major categories of tactics: assertive, performance-oriented and defensive tactics. The findings suggest that the sample insurance companies mainly used assertive and performance-oriented tactics in their Covid-19 related narratives. In very few cases, defensive tactics were also used.

The study has potential literary, theoretical and practical contributions. Covid-19 pandemic is a relatively recent phenomenon. As a result, very few studies were conducted on corporate communication on Covid-19 issues. Moreover, most of the accounting literature on Covid-19 focused on the developed economy. This study contributes to this scant literature by focussing on the corporate annual reports of a developing economy. This paper attempts to provide a preliminary idea about how the companies are facing this crisis through strategic corporate communication. The application of Caliskan et al.'s (2021) impression management tactics is another novelty of this paper. Theoretically, it shows that alternative framework can be used by researchers to understand the inner meanings of corporate narratives. Since the Covid-19 pandemic will have a long-term effect on business and the economy worldwide, it is expected that corporate reporting on this issue will gain enough attention from the business world and policymakers. In future, policymakers may call for the betterment of reporting and provide some guidelines.

However, this study is not free of limitations. The sample size is small, and it focuses on one sector only. Moreover, the sample companies were all from the non-life general insurance category. The nature of the study was exploratory. Future researchers can conduct quantitative studies with a larger sample size and find out the determinants of Covid-19 related disclosure. An industry-wise comparison might highlight new issues related to this kind of disclosure.