Is negative internet posting a threat to management? Impression management and firm values: Evidence from China.

Purpose - This study examines the effects of negative internet postings on impression management as well as the impacts of impression management on firm values in China before and during the COVID-19 pandemic. Design/methodology/approach - We collect data on all A-shares listed in Mainland China between 2018 and 2021 from China Stock Market & Accounting Research Database (CSMAR). A total of 3021 firm-year observations were obtained. Findings - We find that management uses more positive tones under the pressure of negative internet postings. Management uses more positive tones and longer MD&A reports during the COVID-19. This study extends the literature by identifying an additional determinant, negative internet postings, of impression management in MD&A disclosures. Originality/value - The findings support the view that management is more likely to use MD&A to mislead investors about firm performance during financial difficulties and under external pressure rather than convey true economic realities of companies.