Legitimating Financial Deficit in Corporate Annual Reports: Evidence in the U.S.

Over the last decade especially in the wake of the COVID-19 pandemic, large companies have confronted overwhelming financial challenges, evidenced by revenue shortfalls and, in certain sectors, deficits. What’s worse, such under-performance poses a serious legitimacy threat on the companies’ right to survive and succeed in the context of heightened public scrutiny of corporate activities and results. Thus, this paper examines and analyzes 50 CEO statements of annual reports published by 21 Fortune Global 500 U.S. companies which were identified in deficit of the year. The study presents the way in which the companies attempted to divert or downplay their deficits via the strategies of Image Enhancement, Deflection, Mitigation and Admission. The findings of this study contribute to apprehending the linguistic and rhetorical elements tactically deployed by the companies for impression management, legitimacy repair and also crisis communication.