Date: 18 Jan 2014

Discussant Comment on “Is Tone at the Top Associated with Financial Reporting Aggressiveness?” by Lorenzo Patelli, Matteo Pedrini

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The authors seek to extend research on the effects of tone at the top. They do so through an examination of the relationship between content in CEOs’ discretionary narrative disclosures and the aggressiveness of companies’ financial reporting. Specifically, Patelli and Pedrini (2013) (hereafter P&P) conduct an analysis of the association between lexical features found in 522 CEO annual report letters and financial reporting aggressiveness. The authors find that several dimensions of CEOs’ language are statistically related to the likelihood of financial misreporting.

The remainder of my discussion centers around three key themes: contribution, theory development, and future research.


The findings in P&P are consistent with arguments that tone at the top has a key role in influencing a firm’s ethical behavior as manifested in its accounting practices. Consequently, the paper has an important contribution in both the theoretical and practical dimensions. From a prac