Orgar lizacija, volume 46, number 2 Marc ;h-April 2013 Contents 2/2013 RESEARCH PAPERS 47 ANTON PERŠIČ, MIRKO MARKIČ 55 MIHA MARIČ, TAMARA GERDEJ, SANDRA PENGER, EVA JEREB, JASMINA ŽNIDARŠIČ, NINA BURICA 64 MAHDI MORADI, MAHDI SALEHI, SEYYED SAEED MEHRDAD AYASK The Impact of Socially Responsible Reporting on Successful Corporate Operations Human Resources Annual Interview as a Part of Authentic Leadership The Relationship between Delay in Announcing Quarterly Forecasts of Annual Earnings and the Type of Earnings News Editorial office: University of Maribor, Faculty of Organizational Science, Založba Moderna Organizacija, Kidričeva 55a, 4000 Kranj, Slovenia, Telephone: +3864-2374226, E-mail: organizacija@fov.uni-mb.si, URL: http://organizacija.fov.uni-mb.si. Published bimonthly. Full text of articles are available at http://www.versita.com/o (international) and http://organizacija.fov.uni-mb.si. 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Articles are currently abstracted/indexed in: INSPEC, Ergonomic Abstracts, Cabells Directory of Publishing Opportunities, Directory of Open Access Journals, CSA Sociological Abstracts, Die Elektronische Zeitschriftenbibliothek, Research Papers in Economics, ECONIS EDITOR / UREDNIK Jože Zupančič, Univerza v Mariboru, Fakulteta za organizacijske vede CO-EDITORS / SOUREDNIKI Marko Ferjan, Univerza v Mariboru, Fakulteta za organizacijske vede Boštjan Gomišček, Univerza v Mariboru, Fakulteta za organizacijske vede Jurij Kovač Univerza v Mariboru, Fakulteta za organizacijske vede Marjan Senegačnik Univerza v Mariboru, Fakulteta za organizacijske vede EDITORIAL BOARD / UREDNIŠKI ODBOR REVIJE Rado Bohinc, Univerza na Primorskem, Slovenija Roger Blanpain, Catholic University of Leuven, Belgium Franc Čuš, Univerza v Mariboru, Slovenija Vlado Dimovski, Univerza v Ljubljani, Slovenija Daniel C. Ganster, University of Arkansas, USA Jože Gričar, Univerza v Mariboru, Slovenija Werner Jammernegg, Vienna University of Economics and Business Administration, Austria Marius Alexander Janson, University of Missouri, USA Stefan Klein, University of Muenster, Germany Miroljub Kljajič, Univerza v Mariboru, Slovenija Aleksandar Markovič, University of Belgrade, Faculty of Organizational Sciences Hermann Maurer, Technical University Graz, Austria Matjaž Mulej, Univerza v Mariboru, Slovenija Valentinas Navickas, Kaunas University of Technology, Lithuania Ota Novotny, University of Economics, Prague, Czech Republic Milan Pagon, Zayed University, Dubai, United Arab Emirated Björn Pappe, Technical University Aachen, Germany Dušan Petrač, NASA, USA Hans Puxbaum, Vienna University of Technology, Austria Gabor Rekettye, University of Pecs, Hungary Markku Sääksjärvi, Helsinki School of Economics, Finland Vladislav Rajkovič, Univerza v Mariboru, Slovenija Henk G. Sol, Technical University Delft, The Netherlands Velimir Sriča, University of Zagreb, Croatia Paula Swatman, University of South Australia, Australia Brian Timney, The University of Western Ontario, Canada Maurice Yolles, Liverpool John Moores University, United Kingdom Douglas Vogel, City University of Hong Kong, China Gerhard-Wilhelm Weber, Middle East Technical University, Turkey Stanislaw Wrycza, University of Gdansk, Poland DOI: 10.2478/orga-2013-0007 The Impact of Socially Responsible Reporting on Successful Corporate Operations Anton Peršič1, Mirko Markič »2 1Sallaumines 10a, 1420 Trbovlje, Slovenija, anton.persic@triglav.si 2University of Primorska, Faculty of Management, Cankarjeva 5, 6000 Koper, Slovenia, mirko.markic@fm-kp.si The aim of our research was to study the impact and purpose of the reporting on socially responsible conduct on the success of corporate operations. The data and information were gathered with the quantitative research method, whereas the instrument for gathering them was a questionnaire that was distributed among 759 large and medium sized organisations from the field of market services in the Republic of Slovenia. We have established that activities aimed at socially responsible conduct are directly connected with the success of corporate operations, especially the revenue (p = 0.001), the profit of a company (p = 0.000), operational growth (p = 0.007) and operational economy (p = 0.002), and are typical for organizations with a larger number of employees (p = 0.032). In this regard, the real estate and construction market activities received the lowest scores. Research results provide theoretical as well as practical benefits for everyone dealing with the planning, implementation and control of sustainable development, as well as socially responsible conduct within the organization. Key words: sustainable development, social responsibility, market services, operational success 1 Introduction Socially responsible conduct by organizations is in favour of the society, and can be the foundation of a long-term development and growth of said organization. With the questionnaire directed at the members of top management of organizations from the field of market services we wanted to study the expectations and objectives of reporting on social responsibility, and their impact on improving operational results. According to historical data, every society fails when social responsibility as the crucial element of ethical attitude disappears since it prevents narrow-minded and short-lived selfishness (Mulej and Hrast, 2012). The paradigm of social responsibility in general is gaining popularity within the global social environment (Avolio and Gardner, 2005). The focus is shifting towards the organisation's management in the field of employee motivation and constant adaptation to market demands (McAlister et al., 2005; Amabile and Kramer, 2007, 72-83; Daft, 2010; Yukl, 2010), towards new technological advancements, innovative-ness, sustainable development of the organization (Becker et al., 2003; Wilson, 2010), and generally towards the knowledge management of the employees in the organization (Hron, 2004; Ortenblad, 2004; Nohria et al., 2008; Dimovski et al., 2010). Also the demands and expectations of consumers keep changing. They require from the employees in those organizations to constantly adapt to the social environment, they demand an approach to the operational development as well as the creation of added value that is more and more innovative (Schwarz and Carroll, 2003; Kaplan and Norton, 2006; Jeston and Nelis, 2008; Markič et al., 2012). In the current economic situation in the European Union, it is being explicitly emphasized that socially responsible conduct by organizations is no longer a lonesome or self-sufficient initiative to change the business environment. It is much more the most suitable tool for resolving critical socially-economic issues in the society (Mulej and Hrast, 2012). The principles and guidelines of social responsibility are outlined in the most recent release of the ISO 26000 standard, which links the principles of management with the business excellence model EFQM (Green paper, 2010; ISO 26000, 2010). The latter is especially important in the service industry since services are provided by suitably qualified and motivated employees. That is why mutual trust, personal and business reputation, as well as ethical operations of an organization and its employees are the basic conditions that need to be fulfilled in order to assure a successful cooperation with the consumers in the long-term (Windsor, 2006; Celinšek and Markič, 2008). Received: 30th January 2013; revised: 24th February 2013; accepted 5th March 2013 In all developed economies, services in general represent the biggest and growing economic sector from the viewpoint of employment, social capital, and added value. That is why the competitiveness of services is the key determining factor of growth and welfare in modern economies. Besides, services that are directly linked to products or production also play an important role in assuring the competitiveness of the industrial sector. The employment potential of the service sector has been changing significantly over last 50 years. According to Eurostat data for 2011 the employment share in the service sector in Slovenia is 67.26%, whereas the average number in the EU member states is as high as 76.98% (in 2008, the average was 75.79%) - the number is highest in the most well developed EU member states. A very important role of social capital in the global economy plays the field of "market services" as defined by Panorama of European Business. For EU member states, the share of "market services" in the total capital raised in 2011 was 48.09%, whereas it was 43.45% for Slovenia, which means an increase from 42.29% in comparison with the year of 2008 (Eurostat, 2012). Successful organizations propel the development of business excellence and social responsibility models for a comprehensive improvement of the competitiveness of a state. The EFQM business excellence model can serve as an example of integration and as a system for the improvement of an organization's operational success on the basis of the integration of models and leadership standards (Singhal and Hendricks, 2004; Bukovec and Markič, 2008). Numerous studies worldwide and in Slovenia confirm that the connection between social responsibility and economic success has been identified (Kern Pipan, 2010). Therefore Bakker et al. states that 127 empirical studies were reviewed in 2003. Mostly, they confirmed the positive link between individual key components of social responsibility and a financial success of an organization (Bakker, 2008). There have also been international studies on the meaning of social responsibility and its impact on the operational success of companies conducted. They included organizations from the Republic of Slovenia (KPMG, 2005; KPMG, 2008) that in the first place pointed out very limited awareness and generally gravely insufficient reporting on the crucial meaning of social responsibility principles and their consideration in their business environment. What is more, organizations merely acknowledged socially responsible conduct as highly limited forms of sponsorships and donations to non-governmental organizations and associations. They were mostly unfamiliar with environmental aspects, sustainable development, excellence, and the improvement of operations. Also Bodlaj in his research statistically proves the direct connection between market focus of an organization in the social environment, innovations, and business excellence. Integrated standards of managing an organization have been established as the starting point of this link (Bodlaj, 2009). In Slovenia, a formal quality and excellence strategy until 2015 has already been developed (SFBE, 2011). Also a national strategy of social responsibility according to the international standard ISO 26000 has been elaborated as an upgrade of excellence models, which significantly supports the resolution of the global social and economic crisis under the current circumstances. But as a matter of fact, no real effect has been observed in business practices, especially in the field of understanding the meaning and benefits of sustainable reporting on socially responsible conduct, whereas this is the most evident in the service sector (Fink Babič and Biloslavo, 2012). The latter can even be the key to economic development and the growth of the entire society, especially under these critical economic circumstances. Innovations and a revamp of business processes, suitable motivation of employees, constant improvement of competencies of managers and the whole workforce, development and research, as well as creating a higher added value in the operations of an organization are inevitable in order to enable a long-term development and growth of the organization (Kottler and Lee, 2004; Verle et al., 2012). In the context of the research, we created the following hypothesis H1: "Reporting on the social responsibility to external stakeholders is more characteristic of organizations with successful operations." With the hypothesis, we want to assess the impact of socially responsible reporting on operational success. Therefore the purpose of this article is to research the impact and the actual meaning of reporting on socially responsible conduct on operational success of medium sized and large organizations from the market services sector in the Republic of Slovenia. 2 Methodology The quantitative research method, as described by Easterby-Smith, Thorpe and Jackson (2008), served as the foundation for the drafting of the questionnaire. Based on the findings of pilot testing performed in August 2012, we prepared the final version of the questionnaire, which comprised 11 groups of questions. All the selected variables within individual groups measure the field in question or its dimension. In order to prepare the content of the questionnaire, we used some of the existing measurement instruments from previous research, i.e. the questionnaire at the Horus award (Mulej and Hrast, 2012) on the influence of constant improvements and human capital (Kern Pipan, 2010), correlation between social responsibility and financial success of organizations (Gray and Milne, 2004; Porter et al., 2006; Bakker, 2008; Margolis and Elfeibein, 2008), as well as the meaning of social responsibility in Slovenian organizations (KPMG, 2008; CSR, 2009; KPMG, 2011; Fink Babič and Biloslavo, 2012). For the evaluation of questions, we used the 5-grade Likert scale for comparing individual results of the research with previous studies, and their effective processing with the SPSS software. Within the poll that was carried out in September 2012, we distributed the questionnaire among 759 organizations registered in the "market services" sector. The questionnaire was usually addressed to senior executives (members of the management board, executive officers) as the representatives of top management, who also carry the greatest responsibility for taking the principles of social responsibility into consideration, and for the operational success of their organization. The purpose of the questionnaire was to obtain a written assessment of the impact of internal and external aspects of social responsibility - in the forms of activities and report- ing. At the end of the poll, the data were exported from the "FluidSurveys.si" environment and imported into the SPSS software suite. All gathered primary data were statistically analysed using suitable descriptive and inferential statistics. We used a normality test (the Kolmogorov-Smirnov Test and the Shapiro-Wilk Test) to examine the distribution of the gathered data and determine the statistical characteristic in most cases (one-way t test). With the Spearman's rank correlation coefficient, we examined the connection between the aspects of activities and reporting on socially responsible conduct within the organization and in the social environment. Whereas with the independent samples nonparametric test (Kruskal-Wallis), we examined the existence of characteristic differences with regard to the activity sector, size, productivity, efficiency, and ownership of the organization. According to the official data of the Agency of the Republic of Slovenia for Public Legal Records and Related Services (AJPES), there were altogether 759 registered companies under the "market services" designation (according to the Standard Industrial Classification of the Republic of Slovenia 2008 under the codes D through N) in the Republic of Slovenia on 31 March 2012 - 635 medium sized (50-249 employees) and 124 large (more than 250 employees). When sampling the organizations for the study we took the actually crucial impact of market services or services as sources of income provided by medium sized and large companies on the social product creation, their immediate influence on socially responsible conduct, and their fundamental focus on the expertise and certification of quality standards as well as the EFQM business excellence model. There are virtually no micro or small organizations in the field of "market services" (with less than 50 employees) whose conduct and reporting on socially responsible conduct would have a significant impact, or that have obtained quality certificates or other excellence models in Slovenia. They also do not boast of Awards of the Republic of Slovenia for Business Excellence. By sampling the organizations in the study that way, we could more reliably confirm the importance of factors of socially responsible conduct and reporting thereof on management systems in the field of market services that have the strongest impact on the social environment. 3 Results 136 participants across all fields of "market services" activities in the Republic of Slovenia filled out the entire questionnaire. The highest number (19 each) were executives from the fields of commerce, banking and insurance, as well as various other fields of economic activity (14% of all participants each). 41 questionnaires (31.2%) were filled out by representatives of large organizations (more than 250 employees), 67.7% participants were members of top management, 69.1% participants had at least a bachelor's degree or an equal level of tertiary education. The average age was 44 years and the average years of employment in the company they run was 14 years. The number of participants (136) out of total 759 invited organizations means a 17.9% participation share, which is acceptable for the integrity of the statistical analysis of data from this research. The structure of the participating organizations in % by field of activity is shown in Table 1. Table 1: Share of Organizations Participating in the Research -by Field of Activity Field of activity Share % Commerce (G) 14.0 Finance and insurance (K) 14.0 Other various business activities (N) 14.0 Transport and storage (H) 10.3 Professional, scientific and technical activities (M) 10.3 Electricity, gas and steam supply (D) 8.1 Water supply, sewage treatment (E) 8.1 Construction (F) 8.1 Hospitality (I) 6.6 Information technology and communication (J) 3.7 Real estate (L) 2.2 No response 0.7 Social responsibility activities are usually conducted by the employees in an organization. They are directed towards a comprehensive environmental protection (waste sorting, energy efficiency), providing a safe and healthy work environment, respecting values and codes of conduct, efficient communication on all management levels, team work, and generally improving operating results and the development of the organization. The results of the research on the reporting about social responsibility in the form of activities are shown in Table 2. With the one-way t test, we have confirmed that a large majority of companies execute all activities that are bound to external reporting. The only parameter with an above average rating is the sponsorship of events taking place in the local environment (p = 0.410). With the Spearman's rank correlation coefficient, we established how the reporting on social responsibility by means of activities of the employees in an organization is connected with the characteristics of the companies - with the revenue (p = 0.001), profit (p = 0.001), operational growth (p = 0.007), number of employees (p = 0.032), and the economy of a company (p = 0.002). We wanted to know if various activities from the field of socially responsible conduct executed in large "market services" companies impact the operation, revenue, profit, operational growth, economy, and productivity, which was demonstrated with the Spearman's rank correlation coefficient in Table 3. The forms of reporting on socially responsible conduct have already been established in mostly large organizations from the sector of "market services". How they might be linked to the operational success, the field of activity, and the ownership of the organization is shown in Table 4. With regard to the one-way t test we can confirm the statistically characteristic above average reporting on social Table 2: Descriptive statistics - reporting in the form of activities REPORTING in the form of activities N M Me Mo St. Dev. Our company promotes waste sorting, electricity and heating energy efficiency, as well as water conservation 136 4.6 5.0 5 0.627 Preventive activities in the field of occupational health and safety are a part of all operational processes. 136 4.1 4.0 4 0.820 In our organization, we regularly analyse processes and products/services in order to keep improving the organization, as well as its success and performance. 136 4.1 4.0 5 0.872 Our company encourages its employees to participate in team work and to strive for open communication by giving them an opportunity to participate in various sports, leisure and entertainment activities in a broader social environment (cycling, trekking, entertainment events). 136 4.1 4.0 4 0.953 In our company, we acknowledge the understanding of and the commitment to values, culture, and the code of socially responsible conduct of all employees. 136 4.0 4.0 4 0.834 As a rule, our company introduces environmentally friendly technologies into its products/services. 136 4.0 4.0 4 0.834 Our company encourages its employees to strengthen multiculturalism and tolerance towards others also by encouraging them to participate in charity activities and philanthropy in a broader social environment (blood donation, assistance to elderly citizens). 136 3.7 4.0 3 1.04 Our company regularly takes part in environmental cleanups and landscaping activities in a broader social environment. 136 3.6 4.0 4a 1.16 Our company provides regular donations to organizations that dedicate themselves to helping children and adolescents (e.g. organizing seaside vacations, events for children, setting up recreational surfaces). 136 3.5 3.0 3 0.981 Our company encourages its employees to participate in various cultural events in their local environment. 136 3.4 3.0 3 1.05 Our company provides regular sponsorships to professional and scientific conventions from our field of operation. 136 3.3 3.0 3 1.10 Our company provides regular sponsorships to sports clubs and events taking place in our local environment. 136 3.2 3.0 3 1.09 Our company provides regular sponsorships to entertainment and cultural events taking place in our local environment. 136 3.1 3.0 3 1.03 Table 3: Spearman's rank correlation coefficient - reporting (activities) and characteristics of companies Reporting -Activities Revenues Profit Operational growth Number of employees Productivity Economy r 0.284** 0.392** 0.240** 0.186* 0.159 0.284** p 0.001 0.000 0.007 0.032 0.080 0.002 N 123 114 124 134 122 113 Legend: r - correlation coefficient; p - level of importance, N - number of participants responsibility for some apparently already well established forms of reporting, whereas a statistically below average for other forms of reporting, also bound to various forms of communication with the public and the employees - shown in Table 5. With regard to the Spearman's rank correlation coefficient of the reporting on social responsibility, we assessed the connection with regard to the characteristics of companies - the field of activity (p = 0.028), the revenues of the company (p = 0.000), profit (p = 0.000), number of employ- Table 4: Descriptive statistics - reporting in the form of reports REPORTING in the form of reports N M Me Mo St. Dev. 7a - In the annual report, we present all the activities of social responsibility and sustainable development. 136 3.9 4.0 4 1.033 7e - Via the internal newsletter or other means of internal communication, the management regularly informs the employees about the key aspects of the company's social responsibility. 136 3.6 4.0 3 1.079 7b - Socially responsible activities are presented on the company's website. 136 3.5 4.0 3 1.192 7g - The results of socially responsible conduct are presented at various meetings with customers, suppliers, and the local community. 136 3.2 3.0 3 0.971 7f - Socially responsible conduct is presented at forums, conferences, and professional symposia. 136 3.0 3.0 3 1.180 7d - Socially responsible conduct is presented several times a year at press conferences and media briefings. 136 2.9 3.0 3 1.137 7c - We actively participate in bidirectional online communication (blogs, social networks, such as Facebook, Twitter, etc.). 136 2.7 3.0 2 1.215 Table 5: One-way t test - reporting in the form of reports Test Value = 3 95% Confidence Interval of the Difference t df Sig. (2-tailed) Mean Difference Lower Upper reporting_7a 9.959 135 0.000 0.882 0.71 1.06 reporting_7b 5.251 135 0.000 0.537 0.33 0.74 reporting_7c -2.681 135 0.008 -0.279 -0.49 -0.07 reporting_7d -1.056 135 0.293 -0.103 -0.30 0.09 reporting_7e 6.996 135 0.000 0.647 0.46 0.83 reporting_7f 0.000 135 1.000 0.000 -0.20 0.20 reporting_7g 2.648 135 0.009 0.221 0.06 0.39 Table 6: Spearman's rank correlation coefficient - reporting in the form of reports and company's characteristics REPORTING -REPORTS Field of activity Ownership Revenues Profit Operational growth No. of employees Productivity Economy r -0.189* -0.049 0.486** 0.329** 0.119 0.346** 0.228* 0.163 p 0.028 0.576 0.000 0.000 0.189 0.000 0.012 0.085 N 135 135 123 114 124 134 122 113 Legend: r - correlation coefficient; p - level of importance, N - number of participants ees (p = 0.000), and its productivity (p = 0.012) - shown in Table 6. With the Kruskal-Wallis test, we assessed the reporting on social responsibility with regard to the ownership of organizations participating in our research - shown in Table 7. With the Spearman's rank correlation coefficient, we evaluated Hypothesis H1, thus examining if more successful companies are more eager to report on social responsibility by means of activities or reports, which is shown in Table 8. Table 7: Kruskal-Wallis test - ranks, reporting by means of reports with to the ownership Ownership N Mean Rank M REPORTING - mixed 11 92.23 3.81 REPORTS foreign (> 50%) 12 81.08 3.52 domestic state owned (> 50%) 44 79.25 3.50 public institution 6 62.83 3.07 domestic private (> 50%) 62 53.69 2.96 Total 135 3.26 Table 8: Spearman's rank correlation coefficient - operational success and reporting Productivity Economy Revenues Pro(it_loss Operational growth REPORTING_ACTIVITIES r 0.159 0.284** 0.284** 0.392** 0.240** p 0.080 0.002 0.001 0.000 0.007 N 122 113 123 114 124 REPORTING_ REPORTS r 0.228* 0.163 0.486** 0.329** 0.119 Legend: r - correlation coefficient; p - level of importance, N - number of participants 4 Discussion The aim of the research was to obtain new aspects, knowledge, and information about the meaning and impact of the connection between internal and external viewpoints on socially responsible conduct and reporting on the success of the operations of large market services organizations. The most crucial are the results of the correlations between socially responsible conduct, socially responsible reporting, and economic success, which is the foundation of an organization's sustainable development. The research verified the presumption that the representatives of top management in organizations gave highest scores (with regard to the reporting on socially responsible conduct) to the field of environmental protection, especially to the promotion of waste sorting, electricity and heating energy efficiency, as well as water conservation. When it comes to socially responsible activities, there is also a lot of emphasis on occupational health and safety for employees, promotion of team work, as well as continuous improvement of work processes, which are aimed at improving operational results. Activities aimed at socially responsible conduct have been confirmed to be directly connected with the characteristics of companies, especially the revenue (p = 0.001), the profit of a company (p = 0.000), operational growth (p = 0.007) and operational economy (p = 0.002), and are typical for organizations with a larger number of employees (p = 0.032). With regard to the current business environment, the real estate and construction market activities received the lowest scores, which serves as an additional evidence of the expressive economic crisis in the current social environment. When executing social responsibility in the form of reporting, annual reports for reporting to the public outside the company and presenting the operational results via a website have established themselves as the most common practices, whereas reporting to employees rather takes place as an internal newsletter or other forms of communication. Communicating via social networks or presenting results at traditional conferences, forums, or meetings for partners and the media have established themselves to a much lesser extent. With regard to the ownership of an organization, reporting on socially responsible conduct has been acknowledged very well in case of mixed ownership or if majority owners are foreigners. The score is much lower in case of domestic private ownership or public institutions. Results from our research are mostly in line with the findings from other studies, especially those that included organizations from Slovenia (KPMG, 2005; KPMG, 2008). The results state that the management in numerous organizations still understands the role and weight of socially responsible conduct when reporting to their social environment, but in practice it is still not evident enough in the implementation of systematic work process improvement (and thus the improvement of operational results). The results are also accordant with the statement that only the business excellence of organizations and their socially responsible conduct can be in favour of the society, and can be the foundation of a long-term development and growth of us all (Mulej and Hrast, 2012). The results of the research have also demonstrated that companies with significant revenues, high profits, strong operational growth, and with an economical operation to a large extent report on socially responsible activities with the help of the activities in which their employees take part. Companies with high revenues, high profits, and an even more significant productivity to a large extent report by means of reports. We can therefore confirm the Hypothesis H1 made in the research; systematic reporting on their socially responsible conduct by means of activities and reports is characteristic for companies with high revenues and profits. The research was also based on the presumptions (a) that the portfolio of the stated scientific and expert literature from the fields of quality management, excellence models, and social responsibility standards is extensive enough to allow for a suitably comprehensive approach to the described study method; (b) that the formation of social responsibility factors has to include a growing number of requirements regarding environmental protection, and protection of the rights of consumers and employees, also because of the impact of the most recent global changes in business environments; (c) that especially large and medium sized organizations have a significantly stronger influence on the implementation of the factors of socially responsible conduct; and (d) that senior executives in the organizations possess more extensive knowledge and assume a bigger responsibility in understanding and respecting social responsibility factors. We have also identified some limitations stipulating that only large and medium sized organizations from the field of market services in Slovenia (which otherwise have a predominant influence on the social development) could be included in the research, and that usually only more successful organizations that at the same time assume a higher level of social responsibility can partake in the response to the research. We invited senior executives, who are usually better acquainted with the approaches and principles of social responsibility (as well as understand them better), and assume personal responsibility for the operational results of the organization, to participate in the research. The results of our research can be a good starting point for further studies of the importance of the aspects of social responsibility reporting for operational success, codependency, and the sustainable growth of an organization. References Amabile, T. M. & Kramer, J. S. (2007). Inner work life. 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Later on, he graduated from Gea College (Ljubljana), receiving the MBA in Business Administration. Currently, he is finalizing his doctoral thesis at the Faculty of Organisation Studies in Novo mesto, in the field of Quality Management. With more than 30 years of experience in metal and engineering industries, as well as in the services sector, he has been working for the Zavarovalnica Triglav, d.d. insurance company as Head of Standardization for more than 15 years. At the same time, he has taken the leadership and membership in several project teams in the field of reorganization and recording of business processes, and has also served as the administrator of the quality management system and the head reviser of the management system in accordance with ISO 9001 and ISO 27001 at SIQ. Mirko Markič is a Professor of management in the Faculty of Management Koper at the University of Primorska. He received his Master's and Doctor's degrees from the Faculty of Organizational Sciences, University of Maribor. His work includes more than 420 bibliographical items: articles in science and professional journals as well as in proceedings of scientific and professional conferences. He has worked as leader or member in 15 research and entrepreneurs projects. After 12 years of experience in automotive industry, he started his academic career. Vpliv vidikov družbeno odgovornega poročanja na poslovno uspešnost Namen naše raziskave je bil proučiti vpliv in pomen poročanja o družbeno odgovornem ravnanju na uspešnost poslovanja organizacije. Podatke in informacije smo zbrali s kvantitativno metodo raziskovanja, kot pripomoček za zbiranje pa smo uporabili vprašalnik, ki smo ga posredovali vsem 759 velikim in srednje-velikim organizacijam na področjih izvajanja tržnih storitev v Republiki Sloveniji. Ugotovili smo, da imajo aktivnosti družbeno odgovornega ravnanja neposredno povezanost z uspešnostjo podjetij, posebej na prihodek (p=0,001), dobiček podjetja (p=0,000), rast poslovanja (p=0,007), na ekonomičnost poslovanja (p=0,002) ter je značilno za organizacije z večjim številom zaposlenih (p=0,032). Pri tem so najnižje ocenjene dejavnosti poslovanja z nepremičninami in gradbeništva. Izidi iz raziskave ponujajo tako teoretične kot tudi praktične koristi za vse tiste, ki se ukvarjajo z načrtovanjem, izvajanjem in obvladovanjem trajnostnega razvoja in družbeno odgovornega ravnanja v organizaciji. Ključne besede: trajnostni razvoj, družbena odgovornost, tržne storitve, poslovna uspešnost DOI: 10.2478/orga-2013-0005 Human Resources Annual Interview as a Part of Authentic Leadership Miha Marič1, Tamara Gerdej1, Sandra Penger2, Eva Jereb1, Jasmina Žnidaršič1, Nina Durica3 ^University of Maribor, Faculty of Organizational Sciences, Kidričeva 55a, 4000 Kranj, Slovenia, miha.maric@fov.uni-mb.si, 2University of Ljubljana, Faculty of Economics, Kardeljeva ploščad 17, 1000 Ljubljana, Slovenia, sandra.penger@ef.uni-lj.si, 3Higher Business School of Professional Studies, Vladimir Peric-Valter 4, 21000 Novi Sad, Serbia, ninadjurica@yahoo.co.uk In the paper one of the techniques used in human resource management annual interview as an important part of authentic leadership is discussed. Authentic leadership is the most important matter at the present moment in leadership development and emphasizes the leader's authenticity. For a leader to be authentic we believe he should have an in depth knowledge of people he is working with and that can be achieved through communication. One of the standardized forms of communication between a leader and his coworkers are annual interviews. In the research where 565 people participated we found out that annual interview is an important part of human resource management and is closely related to authentic leadership. The relation is especially relevant in the part of managing and collaborating with colleagues and subordinates. Keywords: HRM, annual interviews, authentic leadership, communication 1 Introduction Annual interviews are one of the techniques used in human resource management and are a very efficient leadership tool which is, when properly used, very interactive and has positive effects on the working environment and the work itself. Annual interviews are often used also as a tool to research work climate and work culture and above all as a way to find out what are the work discrepancies and how to motivate employees. Annual interviews are also a way to pass information on to the employees and to include the employees into the decision making process and the organizations functioning. Authentic leadership is the latest evolutionary stage in leadership development and emphasizes the leader's authenticity. For a leader to be authentic we believe that one should have an in depth knowledge of the people with whom he is working which can be achieved through communication. One of the standardized forms of communication between the leaders and their coworkers are annual interviews. These two terms are the main point of discussion in our study. With enough knowledge about annual interviews and authentic leadership we can make a new form of leadership that could suit all of the needs of employees in organizations of our time. The aim of the study is to present, explore and outline the relationship between the use of the annual interviews process and authentic leadership in organizations. We have conducted our study in Slovenia. With the aim of improving the annual interview process in organization the authentic leadership model is an answer to the call for new form of leadership that would suit the needs of employees in modern organizations (Dimovski et al., 2009). Hence, the focus of this study is on the impact that human resources annual interview has on authentic leadership. Implementation of the annual interview process in modern learning is based on leadership - direct influence on followers and should start at top management which must show with their behavior and open dialog that it is ready to dedicate itself to constant improvement (Phillips, 2003). The basic idea behind this paper is that human resources annual interviews are very important when trying to be an authentic leader in an organization. However, to be an authentic leader in a learning organization it is essential to know very well oneself and the organization in order to know what needs to be improved or changed. We will determine the correlation between various aspects on the use of annual interview and authentic leadership and test how variables of the annual interviews concept determine various aspects of authentic leadership. 2 Human resources annual interview and authentic leadership Human resource management (HRM) is the strategic and coherent approach to the management of an organization's Received: 22nd February 2012; revised: 23th May 2012; accepted 5th December 2012 most valued assets - the people working there who individually and collectively contribute to the achievement of the objectives of the business (Armstrong, 2006). Valid theories in HRM provide frameworks for predicting, understanding and influencing the thoughts, feelings and behaviors of employees in the workplace. HRM theories also provide guidance for designing interventions and interpreting the results (Latham & Stuart, 2007). Armstrong (2006) states that the terms "human resource management" and "human resources" (HR) have largely replaced the term "personnel management" as a description of the processes involved in managing people in organizations. HRM functions (selection, compensation, appraisal etc.) are closely linked to the traditional concept of the job and via this connection to various performance outcomes (Cardy et al., 2007) and they appear by employing one or more employees (Sezer, 2009). Focusing on organizational performance mainly from financial stakeholders' perspective is no longer sufficient (Colakoglu et al., 2006). Human resource systems are related to firm performance (Arthur and Boyles, 2007). Effective management of people is increasingly recognized in the literature as a vital contributor to organizational performance and indeed survival (Jack et al., 2006). Iles et al. (2009) are comparing HRM to talent management (TM) and asking themselves whether TM is merely a re-packaging of what already exists, not being distinct from traditional HRM practices or disciplines. In TM a lot of time is spent on discussing to the development of the asset. Others suggest that the role of HRM practices should be linked with the functioning of PM teams in order to understand to what extent it may condition knowledge creation processes (Bellini and Canonico, 2008). Changes in competitive environments are resulting in changes to the nature of work. The level of success in light of these organizational changes will largely be determined by how effectively people are managed in the new organizational environments and those HRM practices that adapt to the new organizational conditions can add tremendously to the business and be a key to long-term competiveness (Cardy et al., 2000). For instance, some discuss the role of HRM practice in developing the informed workplace (Othman & Teh, 2003). HRM also plays a major role in times of major transformations or strategic change (Den Hertog et al., 2010). 2.1 HR Annual interview The annual interview is an in-depth discussion between the leader and a co-worker, throughout which they talk about everything that might improve: their relationship, working conditions, employee's motivation and employee performance. The interview gives an overview of past, present and future plans. The interview is carried out regularly at the same periods of time but at least once a year. In some organizations regular interviews every six months are being put in practice in some even regularly every quarter. It is advisable to start with an annual period of time and gradually shorten this period when managers and staff interviews are already familiar with it (Majcen, 2001: 15). The annual interview gives the basis for evaluating performance at work, planning further development, education and employees career. Often this type of conversation is the only opportunity offered to an employee in a full year to align his aspirations and expectations with the requirements and expectations of the company (Brečevic, 2000: 77.). We would recommend to the companies to repeat interviews regularly, at least once per year so that the positive effects of the interviews would not be lost. That is also where the title of an annual interview comes, from the time period in which it should be at least once executed. The annual interview between the manager and workers is the highest level of human resource management. The interview is therefore not intended to criticize the employee's work, behavior or conditions in which they work. Description of the terms is a simple declaration of the current state and the starting point for improvement. In-depth and systematic conversations at least once a year are the only real basis for individual career planning and at the same time they also benefit managers and the company. Annual interviews are not just an administrative procedure; they are means of creating a common vision, purpose and reason of the existence of the organization, informing the individual that understands how to contribute to the success of the entire company (Brečevic 2000: 77). 2.2 Authentic leadership A look at the taxonomy of the concept of authentic leadership will show us that leading researchers from the field of organizational behavior are interested in it (Luthans and Avolio 2003; May et al. 2003; George 2003; Avolio et al. 2004a; Gardner and Schermerhorn 2004; Avolio and Gardner 2005; Gardner et al. 2005; Ilies et al. 2005; Sparrowe 2005; Copper et al. 2005). First Slovenian researchers to dedicate the attention to authentic leadership and development of positive organizational identity of learning organization are Penger (2006), Peterlin (2007) and Dimovski et al. (2009). Multi-dimensional influence of authentic leadership that reaches all employees is the main reason why so many researchers are looking into it. The essence of authenticity is knowing oneself, accepting and remaining who you really are. Instead of accepting authenticity as a theoretical construct it is better to understand it as element of continuum where leaders and their followers are becoming more and more authentic the more they are preserving their true values, preferences and identity (Copper et al., 2005). Authentic leaders follow five dimensions (George, 2003): understanding their purpose, practicing solid values, leading with heart, establishing connected relationships and demonstrating self-discipline. Authentic leaders are people with high level of authenticity: they know who they are, what they believe in, what they appreciate and in interaction with others they act in accordance with their values and believes (Avolio and Gardner, 2005). Authentic leaders are self-confident, full of hope and trust, optimism and ethical (Cooper et al., 2005). Main advantage of an authentic leadership is the chance for constant development that its environment and philosophy enables (Gardner and Schermerhorn, 2004). Crucial challenge of an authentic leadership demonstrates itself in the awareness of leaders that an individual is the most important part in the organizational network of knowledge (Storr, 2004; Sparrowe, 2005). Authentic leaders need to identify the advantages of their followers and help them to develop them and connect them with common goal, purpose, vision and identity of the organization. Even though authentic leadership may have direct impact on the behavior of followers (Jensen and Luthans, 2006; Ilies et al., 2005; Gardner et al., 2005; Harvey et al., 2006), its impact is much stronger and motivating if followers identify with their leaders. Consequently, the main thesis of this paper is that authentic leadership enables, support and progress the annual interview process with positive outcomes for parties, client and the interviewer. We claim that authentic leadership practices need to be developed in order that management can learn more effectively and consequently transfer knowledge with the aim of improving the positive effects of annual interviews. Authentic leader's dedication to progress and development, starting at one's self, works as an indispensable example for co-workers. Authentic leaders need to be committed to constant learning (Schein 1992) that requires self-changing, high level of motivation for learning from one's mistakes, emotional power for dealing with fear and unpredictability, ability for establishing connected relationships and demonstrating self-discipline and self-trust. 3 Methodology Research questions Our study attempts to investigate three questions that emerge from the preceding discussion. Through the research, we attempt to determine: R1: Are various determinants of annual interview and the concept of authentic leadership related and in which manner? R2: How are the main variables that are constructing the concept of authentic leadership determined by the variables constructing the annual interview? R3: Which interviews are perceived as more necessary: once per year or as-we-go? Our survey first sought to determine the relation between annual interviews and the concept of authentic leadership and to determine in which manner they are related. With that issue we wanted to confirm that annual interviews give the basis for evaluating performance at work, planning further development, education and employees' career. Second we tested how variables of the annual interviews concept determine various aspects of authentic leadership. We believe that not all variables of the annual interviews concept affect various aspects of authentic leadership in the same manner to the same extent. The survey also investigated whether organizations perceived as more necessary one per year interviews or as-we-go interviews. Authors would like to recommend to practitioners to conduct interviews regularly, at least one per year. It is the only way that the positive effects of the interviews would not be lost. Sample Participants in this study were selected randomly. The subjects were invited to individually respond to a questionnaire. Participation was voluntary. The questionnaire was prepared based on the previously described theory and given to interviewers whose' assignment was to randomly select respondents and bring back the filled out questionnaires. A total of 565 complete responses were obtained. The sample consisted of 283 men and 282 women (n=565). The age range of the respondents was between 21 and 66 years. The average age of the respondents was 36 years and 3 month. The questionnaire was of the closed type. For questions 3 to 25 we calculated the Cronbach's alpha coefficient. The value calculated is 0.874, which indicates great reliability of measurement. With regard to the composition and characteristics of the sample, we believe that it is representative. Instrument and Variables The questionnaire was of a closed type and contained 25 questions referring to the following: A. General data 1. age 2. gender B. Annual interviews 3. We use annual interviews in our organization. 4. We perform informal interviews in our organization. 5. I can always state my opinion at the annual interview. 6. At the annual interview, I feel that my "leader" really listens to me. 7. At the annual interview, I feel that my "leader" understands me. 8. At the annual interview I feel comfortable. 9. At the annual interview speaks mostly just the "leader". 10. At the annual interview the "leader" encourages me. 11. I have the feeling that the leader is well prepared for the annual interview. 12. Annual interviews are needed. 13. Ongoing discussions are needed. 14. At the annual interview I speak only the truth. 15. At the annual interview I am also critical. 16. I receive feedback from my superiors. 17. Talking to my superior motivates me. C. Authentic leadership (What is your leader like?) 18. Leader has a positive attitude towards work and colleagues. 19. Leader is optimistic and has a strong personal self-image - a strong "I". 20. Leader gives hope for the development of solutions. 21. Leader builds trust among colleagues. 22. Leader has a lot of psychological support from colleagues. 23. Leader has a high degree of personal self-esteem. 24. Leader is primarily focused at finding the positive values of colleagues. 25. I personally identify myself with the leader (we have "the same view of the world"). Questions from 3 to 25 were measured on a scale ranging from 1- I absolutely disagree to 5 - I absolutely agree. 4 Results and Discussion In Table 1 the frequency for the variables is shown. As it can be seen from the table, the highest mean value among the variables constructing annual interviews has the variable "Ongoing discussions are needed" (3.94) and the highest mean value among the variables constructing authentic leadership has the variable "Leader has a positive attitude towards work and colleagues" (3.73). In Appendix 1 the Pearson R Correlation Coefficients are shown for the above described variables. With the predictors which were used to describe the "use of annual interviews" 31.9% variance of "Leader has a positive attitude towards work and colleagues" is explained. "I have the feeling that the leader is well prepared for the annual interviews" (ß=0. 224) has the most influence. With second predictors which were used to describe the "use of annual interviews" 23.9%o variance of "Leader is optimistic and has a strong personal self-image - a strong "I"" is explained. "Ongoing discussions are needed" (ß=0. 204) has the most influence. Table 1: Frequency table for the variables Mean Median Std. Deviation Annual interviews We use annual interviews in our organization. 3,57 4 1,044 We perform informal interviews in our organization. 3,64 4 0,98 I can always state my opinion at the annual interview. 3,59 4 1,04 At the annual interview, I feel that my "leader" really listens to me. 3,34 3 1,001 At the annual interview, I feel that my "leader" understands me. 3,41 3 0,937 At the annual interview I feel comfortable. 3,33 3 1,008 At the annual interview speaks mostly just the "leader". 3,33 3 1,018 At the annual interview the "leader" encourages me. 3,48 4 0,91 I have the feeling that the leader is well prepared for the annual interview. 3,8 4 0,972 Annual interviews are needed. 3,74 4 0,975 Ongoing discussions are needed. 3,94 4 0,968 At the annual interview I speak only the truth. 3,65 4 0,844 At the annual interview I am also critical. 3,58 4 0,945 I receive feedback from my superiors. 3,66 4 0,903 Talking to my superior motivates me 3,34 3 0,974 Authentic leadership Leader has a positive attitude towards work and colleagues. 3,73 4 0,861 Leader is optimistic and has a strong personal self-image - a strong "I". 3,64 4 0,874 Leader gives hope for the development of solutions. 3,63 4 0,851 Leader builds trust among colleagues. 3,52 4 0,886 Leader has a lot of psychological support from colleagues. 3,39 3 0,869 Leader has a high degree of personal self-esteem. 3,61 4 0,85 Leader is primarily focused at finding the positive values of colleagues. 3,54 4 0,894 I personally identify myself with the leader (we have "the same view of the world"). 3,32 3 0,959 ^ I ^ - Is ^ ii •ii.^ ^ -J Ö ■i ^ ^ e 2 e ne de 2 e o p ^ "'S oa le L rv nter a er on • . -S on e nh tig is ^ "" ^ Sf ^^ ^ ^^ «1 « h v M ^ ^ s ^ n ü s hJ e ■d - ^ a hJ-a-^® . « a S oh c«^ C ^^ SB CS d a h ttit a e doll d ti ea hJ o a eta £0 ri O ^ oe u iu •iS ^ de B "O 5 5 ,0 0, 8 7 ,0 0, 2 9 ,0 0, 4 5 ,0 0, 0 0 0 8 0 2 5 ,0 0, 4 ,0 0, ez si eg 5 2 0 4 3 ,0 0, 5 8 0 ,0 0, 8 3 ,0 0, 24 ,0 0, 6 2 6 5 ,0 0, irm izat er po 9 5 ,0 0, 4 8 ,0 0, 8 0 5 0 0 ,0 0, 4 0 ,0 0, 5 5 84 ,0 0, n io ini opi y . ate vie ar s in yi a iS 3 na 6 7 ,0 0, 6 2 7 9 0 6 0 7 6 0 8 0 0 7 0, tlh me ,w ten ^^ r ely li rea a a aa he "le 64 ,0 0, 2 9 ,0 0, 6 9 0 7 ,047 0, 6 2 ,0 0, 3 6 ,0 0, feme de v r te li un a a aa he "le 9 2 ,0 0, 9 5 ,0 0, 7 0 8 7 2 ,0 0, 2 2 ,0 0, 2 0 ,0 0, 8 9 ,0 0, g ^ S ^^ na a rt eo At co ,04 0, 9 5 ,0 0, 6 9 0 94 0 9 3 2 ,0 0, 7 3 ,0 0, k a pea s . w r" ee nt" i e ut Ö t^ nu At mo 5 0 5 4 9 0 0 2 9 ,0 0, ,0 0, 5 0 ,0 0, ,0 0, 7 5 ,0 0, ua he enc 7 9 0 4 1 0, 8 0, 3 8 0 94 0 6 7 3 3 24 2 r der al a le u n e th n a e at th th r or f g n d el e e f r a p e th e r p s. ws ie e v el vi r a w te h is int 2 6 0 7 6 0 7 2 ,2 0, 3 8 0 9 5 ,0 0, 8 3 ,0 0, 44 ,0 0, e p w ie vi r te int ial th. ^ ^ e th the tly At onl ,0 0, ,0 0, ,0 0, ,0 0, 9 6 ,0 0, 0 0 ,0 0, ,0 0, 0 ,0 0, 9 6 0 8 4 44 ,0 0, 6 5 ,0 0, 8 4 64 ,0 0, 6 8 ,0 0, p u y m db e I ri 5 4 ,0 0, 9 9 0 6 5 ,0 0, 9 8 2 7 p u s my to g k. With next predictors which were used to describe the "use of annual interviews" 75.5% variance of "Leader gives hope for the development of solutions" is explained. "I have the feeling that the leader is well prepared for the annual interviews" (ß=0. 176) has the most influence. With forth predictors which were used to describe the "use of annual interviews" 21.1% variance of "Leader builds trust among colleagues" is explained. "At the annual interview, I feel that my "leader" understands me" (ß=0.193) has the most influence. With fifth predictors which were used to describe the "use of annual interviews" 21.0% variance of "Leader has a lot of psychological support from colleagues" is explained. "At the annual interview I speak only the truth" (ß=0. 214) has the most influence. With next predictors which were used to describe the "use of annual interviews" 14.8% variance of "Leader has a high degree of personal self-esteem" is explained. "I have the feeling that the leader is well prepared for the annual interviews" (ß=0.181) has the most influence. With eighth predictors which were used to describe the "use of annual interviews" 21.8% variance of "Leader is primarily focused at finding the positive values of colleagues" is explained. "I receive feedback from my superiors" (ß=0.148) has the most influence. With the last predictors which were used to describe the "use of annual interviews" 14.8% variance of "I personally identify myself with the leader (we have "the same view of the world")" is explained. "Talking to my superior motivates me" (ß=0.145) has the most influence. Discussion Through our research we were able to answer our first research question (R1): "Are various determinants of annual interview and the concept of authentic leadership related and in which manner?" on the correlations between the variables composing the use of annual interviews and of those composing authentic leadership. From Appendix 1 we can see that almost all of the variables representing human resources annual interview are related to the variables representing authentic leadership and with all except for nine the correlation is statistically significant. For ten of the 111 statistically significant correlations the correlation is significant at the 0.05 level (2-tailed) and for the remaining 101 the correlation is significant at the 0.01 level (2-tailed). Only one correlation is negative and that is the correlation between variable "At the annual interview speaks mostly just the leader" and "Leader is optimistic and has a strong personal self-image -a strong "I"" (r=-0.103 at p=0.014). We have also answered the second question (R2): "How are the main variables that are constructing the concept of authentic leadership determined by the variables constructing the annual interview?" by conducting regression analyses between the eight variables representing authentic leadership for which we supposed are dependent on the interdependent variables representing human resources annual interview. With the independent variables we can explain some percent of dependent variables. Most determinate by variables representing annual interview and between the variables representing authentic leadership is variable "Leader gives hope for the development of solutions" with 75,5% explained variance. All other variables presenting authentic leadership could be explained around 20% to 30% variance. Least determine independent variables which were explained 14,8% variance are "Leader has a high degree of personal self-esteem" and "I personally identify myself with the leader (we have "the same view of the world")". Which interviews are perceived as more necessary, our third research question (R3): "Which interviews are perceived as more necessary: once per year or as-we-go?", can be answered simply by taking a look back at our frequency table for the variables (Table 1) where means for the "Annual interviews are needed" and "Ongoing discussions are needed" were 3.74 and 3.94 from which we could conclude, that they are both needed but still ongoing discussions are perceived as slightly more important. Several limitations of this study need to be considered. First; the discussed findings and implications were obtained from a single study; generalizing the results should be done with caution. Second; the whole research was focused mostly on how human resources annual interview affects authentic leadership. We are aware that our concept could be influenced also by other variables that are not included in this study. 5 Conclusion Annual interviews are an important part of human resource management and as can be concluded form this study they are also related to authentic leadership. The relation is especially relevant in the part of managing and collaborating with colleagues and subordinates. This study provides basic insights into the connection between the use of annual interviews and authentic leadership and it can be summarized as follows: the use of annual interviews is one of the many things that are composed into authentic leadership, but it does not explain the whole concept of authentic leadership, because there is an infinite number of variables that influence authentic leadership and here we have only explained several of them. On the basis of the results of the research we can maintain that the roots to the problem of successful implementation of the annual interviews also lie in the absence of authentic leadership skills and leadership practices. We have outlined the importance of highly developed organizational context and the development of positive psychological capacities: self-esteem, hope, trust, optimism and flexibility that need to be dispersed across the organization in order to gain greater organizational and follower outcomes and performance within the annual interview processes. Based on our analysis we can conclude that of all the activities that construct authentic leadership, the part best explained by the use of annual interviews is that the leader using annual interviews gives hope for the development of solutions. References Armstrong, M. (2006). A Handbook of Human Resource Management Practice (10th ed.). London: Kogan Page. Arthur, J. B. & Boyles, T. (2007). 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Knowing communities in project driven organizations: Analysing the strategic impact of socially constructed HRM practices. International Journal of Project Management, 26, 44-50, http://dx.doi.org/10.1016%2Fj.ijpro-man.2007.08.007 Brečevič, D. (2000). Letni razgovor [Annual interview]. Zbornik referatov, XV. Posvetovanje Društva za vrednotenje dela, Bled 11. - 12. May 2000. Cardy, R. L. et al. (2000). Dynamic and customer-oriented workplaces: Implications for HRM practice and research. Journal of Quality Management, 5, 159-186, http://dx.doi.org/10.1016%2 FS1084-8568%2801%2900019-0 Cardy, R. L. et al. (2007). Employee equity: Toward a person-based approach to HRM. Human Resource Management Review, 17, 140-151, http://dx.doi.org/10.1016%2Fj.hrmr.2007.03.006 Colakoglu, S., et al. (2006). Measuring HRM effectiveness: Considering multiple stakeholders in a global context. 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Small entrepreneurial ventures culture, change and the impact on HRM: A critical review. Human Resource Management Review, 16, 456-466, http://dx.doi. org/10.1016%2Fj.hrmr.2006.08.003 Jensen, S.M., Luthans, F. (2006). Entrepreneurs as authentic leaders: impact on employees'attitudes. Leadership&Organization Development Journal, 27, (8), 646-666, http://dx.doi.org/10.1 108%2F01437730610709273 Latham, G. P. & Stuart, H. R. (2007). Practicing what we preach: The practical significanceof theories underlying HRM interventions for a MBA school. Human Resource Management Review, 17, 107-116, http://dx.doi.org/10.1016%2Fj.hrmr.2007.03.005 Luthans, F. & Avolio, B.J. (2003). Authentic leadership: A positive developmental approach, in: Cameron, K.S., Dutton, J.E. in Quinn, R.E.: Positive organizational scholarship, San Francisco: Barrett-Koehler. Majcen, M. (2001). Redni letni razgovori med vodjo in sodelavci [Regular annual interview between the leader and coworkers. Ljubljana, GV založba. 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The Learning Organization, 10, (2), 98 - 105, http://dx.doi.org/10.1108%2F09696470910462102 Schein, E. H. (1992) Organizational Culture and Leadership. John Wiley & Sons. ISBN 0787985058, 9780787985059. Sezer, C. (2009). An analysis on relations between implementation of training activities and HRM organization in service businesses: A sample in hotels. Procedia Social and Behavioral Sciences, 1, 2385-2389, http:// dx.doi.org/10.1016%2Fj.sbspro.2009.01.418 Sparrowe, R.T. (2005). Authentic leadership and the narrative self. The Leadership Quarterly,16, (3), 419-439, http://dx.doi. org/10.1016%2Fj.leaqua.2005.03.004 Storr, L. (2004). Leading with Integrity: A Qualitative Research Study. Journal of HealthOrganisation and Management, 18, (6), 415-434, http://dx.doi.org/10.1108%2F14777260410569984 Miha Marič graduated in 2006 and in the following year (2007) received his master's degree at the Faculty of Economics, University of Ljubljana. He is currently employed as an assistant at the Faculty of Organizational Sciences University of Maribor and is a doctoral student at the Faculty of Economics, University of Ljubljana. Tamara Gerdej is master student at the Faculty of Organizational Sciences, University of Maribor. She graduated in Evaluation the Quality of Teaching process in Secondary Schools at the Faculty of Organizational Science in 2011. Eva Jereb is a professor in the Department of Personnel and Information Sciences and Vice Dean for Educational activity at the Faculty of Organisational Sciences, University of Maribor, Slovenia. Her main research interests are in higher education, e-learning, human resource development, personnel expert systems, office automation and the phenomenon of telework. Sandra Penger is an assistant professor of Management and organization at the Faculty of Economics at the Department of management and organization, where he has been employed since 1998. In 2006 she successfully defended her doctoral dissertation. She is currently one of the leading researchers of authentic leadership in Slovenia. Jasmina Žnidaršič graduated in Marketing and marketing communications at the Faculty of Social Sciences in 2005 and in 2007 received her master's degree in International relations at London Metropolitan University, London. She is currently employed as an assistant in the Department of Human Resource Systems at the Faculty of Organizational Sciences, University of Maribor. Nina Durica is a teaching assistant at the Higher Business School of Professional Studies in Novi Sad. She defended her graduation and master thesis at the Faculty of Organizational Sciences of the University of Belgrade. She is a PhD student at the Faculty of Organizational Sciences, the chosen field: management. Her area of interest are: organization, entrepreneurship and management. Kadrovski letni razgovori kot del avtentičnega vodenja Povzetek - V prispevku so obravnavani letni razgovori, ki so ena izmed tehnik uporabljanih za upravljanje s človeškimi viri, kot pomemben dela avtentičnega vodenja. Avtentično vodenje je najbolj pomembna stvar v tem trenutku na področju razvoja voditeljstva in poudarja avtentičnost vodje. Da bi vodja bil avtentičen, verjamemo, da bi moral imeti poglobljeno poznavanje ljudi s katerimi dela, ter da je to mogoče doseči s komunikacijo. Ena izmed standardiziranih oblik komunikacije med vodjo in njegovimi sodelavci so letni razgovori. V raziskavi, v kateri je sodelovalo 565 ljudi smo ugotovili, da je letni razgovor pomemben del upravljanja s človeškimi viri in je tesno povezan z avtentičnim vodenjem. Povezanost je še posebej pomembna v okviru upravljanja in sodelovanja s sodelavci in podrejenimi. 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Running a multiple linear regression on data collected from Rahavard Novin software and the companies' financial statements, is the method of this study to investigate this relationship. Consistent with the pattern of good news early, bad news late, it was found that there is a positive relationship between the bad news type and the amount of delay in announcing quarterly forecast of annual earnings; so that the firms with negative adjustments in earnings forecast (bad news), on average, have 12 more days delay in the announcement. Considering other variables showed that as coverage percentage - a sign of success - increases, the amount of delay in announcing earnings forecast decreases, but companies with losses per share, on average, have an additional delay of about 6 days. The results obtained indicate that at least, in some industries there is certain time for reporting. Finally, it became clear that in the period after the adoption of the new disclosure instruction, despite the increased deadline, the amount of delay in earnings announcement has declined by about 2 days. In this study, for the first time in Iran, one of the company's financial news (quarterly forecasts of annual earnings), have been classified into good and bad, based on comparison with the market expectation, and the relationship between the news type and the amount of delay in announcing the news, has been examined. Keywords: Reporting delay, Good news, Bad news, Annual earnings per share quarterly forecast. 1 Introduction The main qualitative characteristics associated with the content of information are 'relevance' and 'reliability'. If financial information is not relevant and reliable, it will not be useful. For information to be relevant, timeliness of its disclosure is a necessity. Reporting delay reduces the usefulness of information for users. Also, release of information as earliest time as possible, can prevent information from leaking to those close to the company and thereby reduce information asymmetry among the market participants. Considering the fact that time of disclosure depends on the corporate management, several studies investigated the factors affecting the decision on the timing of disclosure by company managers. A factor that has attracted the attention of researchers, particularly is the relationship between the type of news (good news versus bad news), and the timing of disclosure of the news. In the disclosure literature, generally, it confirmed that companies tend to announce good news, early and bad news, late. According to a Tehran Stock Exchange (TSE) instruction, listed companies within the organization should announce their quarterly forecast of annual performance, based on 3, 6, and 9-month performance. On this basis, and given that in Iran, providing management forecasts of annual earnings per share is mandatory, at the end of each quarter, and within a certain deadline, the present study is to investigate the relationship between the type of earnings news and the amount of delay in announcing the earnings forecast per share. The requirement to announce an earnings forecast, on a regular basis, and at the end of each quarter, has provided a unique opportunity to conduct research on the reaction of companies and the market, in response to this requirement. Based on the authors' findings, there is no such requirement in any other country. It suggested that the motivation of the Stock Organization for establishing this requirement 1 Corresponding author: Ferdowsi University of Mashhad, Faculty of Economics and Business Administration, Azadi Square, Vakilabad Bolvard, Mashhad City, Khorasan Razavi Province, Iran, E-mail: mahdi.salehi@um.ac.ir Received: 22nd October 2012; revised: 14th December 2012; accepted 5th January 2013 is to move in line with the overall goal of improving the stock market transparency, and timely and pervasive access to information for users and investors, before and after transaction, (the information disclosure regulation for listed companies in the TSE, enacted in 2002). This study contributes to advances in accounting theory as to pragmatics aspect, because it tries to assess the reaction of the providers of the information themselves to the information provided. 2 Background and hypothesis development 2.1 Good news early, bad news late, pattern Studies conducted since of the early 1980s, investigating the timing of earnings announcement, showed that corporate managers tend to release good news early and delay the announcement of bad news (Roychowdhury and Sletten, 2012; Cullinan et al, 2012; Senguptha, 2004; Bagnoli et al., 2002; Haw et al., 2000; Begley and Fischer, 1998; Damodaran, 1989; Kross and Schroeder, 1984; Chambers and Penman, 1984; Kross, 1982; Givoly and Palmon, 1982; Kross, 1981). Apparently first Beaver (1968) suggested that the lower than expected earnings (bad news) may be reported later than the higher than expected earnings (good news). Based on this, Kross (1981) conducted empirical research on the relationship between profitability and earnings announcement delay, which his result confirmed this subjective idea that bad earnings news is released late. Kross (1982) investigated the market perception of the delay in reporting and tried to understand whether market reacts the timing of annual earnings announcement. The results showed that the stocks of companies that released their annual reports later (including the holder of good news and bad) had lower abnormal returns than the companies did release their reports earlier than the expected time. Findings of Givoly and Palmon (1982) also confirmed this result. Chambers and Penman (1984) observed the differential positive Abnormal returns associated with an earlier than expected reports, concluded that when companies have good news, they publish their reports earlier. These three researches measured the market reaction to the delay, regardless of the type of earnings news. Unlike previous studies, that examined only the announcement of annual earnings Kross and Schroeder (1984) investigated the relationship between the timing of quarterly earnings announcement (early or late) and the type of reported earnings (good or bad). They also investigated the differential effect of late earnings news on stock returns for quarterly announcements. The results of Kross and Schroeder (1984) showed that the quarterly earnings announced earlier than expected (1) contained better news, and (2) had higher abnormal returns than late announcements. Senguptha (2004) also investigated the factors affecting the timing of quarterly earnings announce- ment. The results showed that, bad earnings news had a significant positive effect on the delay in the announcement of quarterly earnings. Bagnoli et al. (2002) reported that managers who announce their earnings later than the expected date, eventually, their declared earnings is, on average, one percent less than the consensus forecast, per each day of delay, which shows that when earnings announcement is later than expected, it usually contains bad news and the further the delay, the worse is the news. In the opposite direction with the results of previous studies Chen and Mohan (1994) have suggested that companies that report too early disclose bad news, a behavior that according to Skinner (1994) could be a preemptive action against the possible litigation risks. The findings of Aubert (2009) from French companies are consistent with this interpretation. His findings indicated that there was a significant negative relationship between bad news and delay in announcing annual earnings. Chen and Mohan (1994) conducted a survey on top management about the issues related to the timing of earnings announcement, and it became clear that about 50% of responding companies had a fixed timetable for earnings announcement. Companies that altered the reporting timing suggested that the level of unexpected earnings had the most effect on the decision about earnings timing. Lower than expected earnings (bad news) was more likely to cause a change in timing compared to higher than expected earnings (good news), and the possibility of changing the date (day) of announcement was more than changing the hour of announcement during a day. Most of previous studies had pointed out that a pattern of "bad news, late," existed. However, consistent with the pattern of "good news, early," findings of Guay and Verrechia (2007) indicated that it is more likely for good news, to be announced early than bad news, and this is due to the inherent conservatism of financial reporting, that is, bad news is usually recognized and reported earlier than good news in the audited financial reports. This asymmetric recognition leads management to voluntarily disclose good news earlier than bad news, to be a compensation for the existing bias toward bad news in financial reporting standards. Underlying patterns in the timing of earnings announcement are not fixed, and by the time, they change with the change in information environment and the advancement of communication and changes in legal and litigation environment. Begley and Fischer (1998) investigated whether or not the increased litigation risk in the United States during the 1980s, has been deleted the pattern of good news early, bad news, late'. Using a sample of the 1980s and early 1990s, they found strong evidence that despite the benefits and costs of delay in reporting bad news has changed but the pattern of timing still exist. Philipich (2009) also investigated the effect of changes in the legal environment on the managers' disclosure strategies, particularly on the pattern of "good news, early, bad news, late". He concluded that the increased pressure and litigation risk and potentially huge losses resulting from these risks, has reduced the directors' dare to delay news announcement and It has weakened the relationship between news type and amount of delay in announcing the news, and they inform us of the likelihood of its disappear in the long term. However, Haw et al., (2006) reported that although new legislative requirements on disclosure process significantly reduced the delay in reporting but the pattern of good news early, bad news late, still maintains in China. 2.2 Determination of the type of earnings news To determine the type of earnings news as to being good or bad, researches have typically compared actually announced figure with market expectation, to classify the announced earnings as good or bad. Earnings higher than market expectation (positive unexpected earnings) are considered good news, and lower than market expectations earnings (negative unexpected earnings), are considered bad news. However, the market expectation is measured by two criteria. To identify the market expectation, Initial researches used the random walk model (time series). In these studies, the increase in earnings compared to the previous quarter(s) or year(s) is considered good news and decrease in earnings is considered bad news (Philipich, 2009, Damodaran, 1989, Patell and Wolfson, 1982). In fact, market expectation obtained from the latest number(s) of earnings announced. However, in developed capital markets, in recent years, the more common criterion has been the mean. Median of the latest analysts' forecasts was used in some studies (Doyle and Magilke, 2012; Bagnoli et al., 2006; Begley and Fischer, 1998). Also related to the factors affecting the timeliness of reporting, some research performed in Iran (Moradi and Poor Hosseini, 2009; Moayyeri, 2007; Sarhangi, 2001; Yaar Mohammadi, 2001). Of course, none of these researches has divided earnings into good and bad, based on comparison with market expectation. Specifically, in these studies, only the effect of net profit or loss, as good or bad news investigated on the amount of delay in reporting, that in two studies (Sarhangi, 2001; Moradi and Poor Hosseini, 2009) its effect on the delay in reporting, has been significant. 2.3 Requirements of TSE In accordance with article 5 of the instruction of Information disclosure in listed companies (approved in Securities Exchange Council, 2002) companies were obliged to announce their forecast of the annual performance based on prior fiscal year performance within at most, 30 days before the new fiscal year, and based on actual performance of each quarter, at most, 20 days after the end of the quarter. In addition, listed companies were obligated to forecast earnings per share (EPS) at the end of each quarter, at most, within 20 days after the end of the quarter. In this regard, in 25/7/2007 the TSE Board of Directors ratified the new instruction of information disclosure for companies listed in TSE. In Chapter III, Section I, paragraph 7 of these instructions, listed stock companies were obligated to announce their forecast of their annual performance based on actual performance of 1st, 2nd and 3rd quarters, up to 30 days after the end of each quarter. About the relationship between the type of quarterly forecasts of annual earnings news and amount of delay in its announcement, there has not been performed any research outside Iran, because, as mentioned earlier, in most countries, forecast of earnings is optional, and in such an atmosphere, discussion of the delay in its announcement, is meaningless and accordingly, in other countries, there is no study to evaluate the delay in announcing quarterly forecasts of annual earnings. Nevertheless, specifically inside the country, there is no study conducted on the delay in announcing the forecasted earnings per share. Thus, based on the results of the previous studies, and consistent with the subject of the present study, to investigate this relationship, the hypothesis of this study is formulated as follows: H1: There is a significant positive relationship between bad earnings news and the amount of delay in announcing the news. 3 Research Methodology Target population includes all companies accepted in the Tehran Stock Exchange, and the available statistical population (the sample) for this study includes all companies accepted in the Tehran Stock Exchange that the information about their announcement of quarterly forecasts of annual earnings and their annual and interim financial statements are available. The following criteria have been used to form the available population (the sample). * Only firms that have issued 3, 6 and 9-month forecasts. * No forecast issued Between 3, 6 and 9-month forecasts. * No forecast issued in two months before the end of the first quarter. * No increase of capital occurred during the investigated year. 2 RAHAVARD NOVIN is an financial information software that collects and classifies the data from Tehran Stock Exchange. The data is provided in a technical pack and a fundamental analysis pack and more. The software is produced by MABNA CORP. Group. The website is: http://www.mabnacorp.com Finally, based on these criteria, 440 firm-years of 236 firms remained. The study period encompasses the years 2004 to 2010 (7 years) and the research place is TSE. By the way, to collect data, financial statements of the companies, TSE website and Rahavard Novin software2, were employed. 3.1 Research model To test the hypothesis, the amount of delay in announcement forecast, has modeled as a function of factors influencing it as follows: Where: DELAY = aj + a2BAD + a3GOOD * %AEPS + a4BAD * %AEPS +a5 %COVER + a6SHARE + a7SIZE + a8BLOCK% + a9CONSOLIDATE n-1 +a^0LOSS + a11POST + ^ßkINDUSTRY + e (1) DELAY: A numeric variable that equals the number of days between the end date of the quarter and the date of announcing annual EPS forecast based on the quarter performance. BAD: It is a dummy variable that equals (1) if the sign of adjusted earnings per share is negative, otherwise 0. This variable captures the relation between bad news and amount of delay in reporting the news, expected this relationship to be positive. Approval or rejection of the research hypothesis will be done based on the sign and significance level of the coefficient of variable BAD. GOOD*%AEPS: the Interaction of good news with the percentage of EPS adjustment that captures the effect of the magnitude of EPS adjustments on the relation between good news and the amount of delay. BAD*%AEPS: the Interaction of bad news with the percentage of EPS adjustment that captures the effect of the magnitude of EPS adjustments on the relation between BAD news and the amount of delay. Its coefficient is expected to have a positive sign. The percentage of EPS adjustment variable (%AEPS) is calculated by comparison of the announced EPS for each quarter with the EPS reported for the previous quarter. For the first quarter EPSs, The percentage of EPS adjustment is obtained by comparison of the last number of real earnings for the past year or the last forecast announced for the current year that is calculated as follows: %AEPS = EPS, - EPS,, I^PS, -J -x100 SHARE: the natural logarithm of the average number of traded shares from the beginning of the year up to the end of the considered quarter. BLOCK%: The percentage of shares belonged to major owners (owning more than or equal to 5%), at the beginning of fiscal year. Following pervious research, the two variables of SHARE and BLOCK% control for the effect of investors' information needs or market demand on delay in reporting (Aubert, 2009; Senguptha, 2004). SIZE: the natural logarithm of sales revenue from the beginning of the fiscal year to the end of each quarter. Disclosure literature has consistently showed that factors of company size are related to different disclosure measures (e.g. Senguptha, 2004, Bushee et al., 2003). CONSOLIDATE: is a dummy variable that equals 1, if the company wwould prepare consolidated financial statements, otherwise 0. This variable controls for the effect of accounting complexity. LOSS: is a dummy variable that is equal to 1, if a company reported zero or negative EPS forecast, otherwise 0. COVER%: controls for the effect of coverage (realization) percentage of the annual earnings forecast in each actual quarterly earnings. Success of a company in realizing a greater part of the annual earnings forecast is a sign of better performance of the company, and it is expected that the greater coverage percentage, delay in announcement of earnings forecast reduce more. POST: Considering the instructions of companies' disclosure, enacted 2007 august, Chapter III, Section I, paragraph 7, deadline to forecast annual earnings per share at the end of each quarter, has increased from 20 days to 30 days. POST dummy variable was entered into the model to control for the effect of change in the deadline. The variable is equal to 1, if the ending date of a quarter would be after the date the new instructions were approved, otherwise it equals zero. INDUSTRY: Virtual variable for the industry a company belongs too. It shown that there are certain conventions among companies in each industry for their time of reporting (Givoly and Palmon, 1982). The industry categories used in this study are as follows: 1. computer services and other services, 2. Automotive and transportation, 3. Chemical, 4. Food, 5. Drug, 6. Machinery and equipment; 7. Building construction, cement and other building materials; 8. Rubber and plastics; 9. Credit institutions; 10. Investment and holding; 11. Metallic and non-metallic minerals, basic metals, and metal products. 4 Results Table 1 shows how the available population has been formed out of the target population. Table 1. The steps to form the available population Forecasts announced over 2004 to 2010. 9114 Remaining forecasts after removal of the firm-years not having a three-month, a six-month and a nine-month forecast 5845 Remaining forecasts after removal of the firm-years having additional forecast between quarterly forecasts. 4547 Remaining forecasts after removal of the firm-years having forecasts within two months before 3-month forecasts. 1872 Remaining forecasts after removal of the firm-years having increase in capital during the investigated year. 1551 Remaining forecasts after omitting the firm-years due to lack of other data. 1320 Based on data recorded in the Rahavard Novin software there was a total number of 9114 announced forecasts for the firm-years that the end of their fiscal year was between 2004 to 2010, that after refining data based on the predetermined criteria, finally, remains 1320 observations from 440 firm-years and from 236 companies, which form the available population for this study. Only firms that have issued 3, 6 and 9 month forecasts, have been selected so that the analysis would be based on the firms which comply with the instructions mandated by the authorities in Tehran Stock Exchange. The second and the third conditions are set so that additional recent forecasts between the standard forecasts may affect the pattern being studied. The number of firm-years in the sample to examine the hypothesis equals to 400 firm-years, including 1200 observations ( a 3 month, a 6 month and a 9 month observations for each firm-year). Using systematic random method the sample was selected out of the available population. Then, using SPSS software, a linear regression (Enter method) was run on the data. Based on preliminary results, the data contain a standard deviation more than 3, in the curve of distribution of residuals of the model were considered outliers and removed and the regression was run again. After repeating this process several times, the final sample obtained includes 1160 records, which was used to test the hypothesis. 4.1 Descriptive data Tables 2 and 3 provide descriptive statistics for the variables used. After removal of outliers, the number of observations remaining to run the final regression and test the hypothesis was 1160 observations. Table 2. Descriptive statistics of quantitative variables in the model Variable Mean Standard deviation Minimum Maximum DELAY 40.38 18.61 3 103 GOOD*%AEPS 0.09 0.73 0 18.22 BAD*%AEPS -0.13 1.12 -28.37 0 %COVER 0.38 1.09 -25.03 17.33 SHARE 12.56 2.53 3.00 19.08 SIZE 25.52 1.40 17.93 30.62 BLOCK% 0.7440 0.1887 0 0.9931 Number of observations: 1160 Table 3. Descriptive statistics of dummy variables in the model Variable Frequency of (1) BAD 198 CONSOLIDATE 337 LOSS 42 POST 799 Number of observations: 1160 As shown in Table 4, F statistic is 8.930 and significance level less than 0.001 that confirms adequacy of the model at a level of higher than 95% confidence. Accordingly, it can be accepted that the model is capable of explain (at least, part of) changes in the dependent variable by Independent variables. The adjusted R square statistic shows that the model variables, in total, have power to determine 12% of the dependent variable variability. Thus, set of present affecting of the influencing independent variables present in the Table 4. Model Summary F statistic Correlation coefficient (R2) Adjusted R2 Std. Error of the Estimate Durbin-Watson 8.930 (0.000) * 0.368 0.136 0.120 17.456 1.640 * Significance level less than 0.001 final model, all together, explain 12% of changes in the DELAY variable. Table 5 shows coefficients obtained by the model fitted by regression for the association between delay variable and the predicting variables. Positive coefficient of 11.67 for the BAD variable shows that firms going to announce negative adjustments in the previous forecasted EPS, on average, have nearly 12 more days delay in announcing of that EPS forecast. This result is consistent with the pattern of good news, early, bad news, late. T-statistic is equal to 8.869, (significance level less than 0.001) that this result confirms our finding with less than one percent probability of error, and thus with more than 95% probability of confidence. Thus, the research hypothesis accepted; in other words, there is a significant positive relationship between the type of earnings news, and the amount of delay in announcing quarterly forecasts of annual earnings. Significant negative coefficient at 0.08 level for the interaction of bad news with the adjustment percentage (BAD*%AEPS) Shows that the magnitude of adjustments has a negative relation with the delay in announcing that adjustment; so that, the larger negative adjustments are announced earlier than smaller negative adjustments. Coverage percentage variable (%COVER) with -1.143 coefficient indicated that higher coverage percentage, as a criterion of company's successful performance, causes the delay in announcing the EPS forecast to be decreased. The p-value is equal to 0.017 that shows the alpha error prob- Table 5. Coefficients Model variables Expected sign coefficient t-statistic Sig. Constant + 24.84 2.46 0.01 BAD + 11.67 8.14 0.00 GOOD*%AEPS -/+ 0.96 1.35 0.18 BAD*%AEPS -/+ -0.90 -1.75 0.08 %COVER - -1.143 -2.396 0.017 SHARE - 0.239 0.985 0.325 SIZE + 0.094 0.213 0.831 BLOCK% - 3.387 1.085 0.278 CONSOLIDATE + 1.964 1.486 0.137 LOSS + 6.307 1.981 0.048 POST + -2.219 -1.883 0.060 Computer services and other services -/+ 9.164 2.478 0.013 Vehicles and Transportation -/+ 7.552 3.511 0.000 Chemical -/+ 2.793 1.341 0.180 Food -/+ 12.254 5.622 0.000 Machinery and equipment -/+ 10.072 4.439 0.000 construction, cement -/+ 11.359 5.848 0.000 Rubber and plastic -/+ 1.912 0.613 0.540 Credit institutions and ^ -/+ 8.141 1.838 0.066 Investment and holding -/+ 1.896 0.731 0.465 Metallic, non-metallic, minerals ... -/+ 7.463 4.047 0.000 Dependent variable: DELAY ability in rejecting the correct null hypothesis was less than 2%. Thus with more than 95 percent confidence it can be said, there is such a relationship. Consistent with initial expectations and previous studies, the positive coefficient of 6.307 for the LOSS variable shows that companies announcing loss per share, have on average, an additional delay of about 6 days. Significance level of 0.048 provides more than 95% confidence in the influence of this variable. Coefficient -2.219 for the POST variable is opposite to the expectations, because it was expected that increase in announcement deadline from 20 days to 30 days, would increase the delay in announcing the quarterly forecasts of annual earnings (a positive coefficient for this variable). The resulting coefficient can be interpreted this way that basically, in recent years due to reasons such as technology advances and the increasing importance of timely reporting, delay in reporting forecasts has been reduced. With this interpretation, POST variable shows that over time the behavior of companies in announcing earnings has been changed. However, at the significance level of 0.06, the reliability of this result can be little reduced. Significance of seven variables for different industries indicates that consistent with the results of previous studies, at least in some industries, there is a special time convention for announcing earnings, and/or managers in a particular industry try to release their EPS forecasts when their colleagues do that. Also in investigated assumptions underlying the regression, to rely on the obtained results, it was clear that the Durbin-Watson statistic is equal to 1.640. Because of its proximity to number 2, it can be confirmed that the residuals are independent. In the Scatter plot of the standardized residuals against standardized predicted values, no trend is observed and the observations symmetry is around point zero, thus the residuals variances are homogeneous. The residuals distribution histogram and p-p plot chart show that the residuals distribution is normal, and eventually, according to the use of several independent variables, the amount of VIF statistic is less than 10 and the amount of Tolerance is approximately 1 that indicate there is no multiple colinearity between the variables. 5 Conclusion In this study, we studied the relationship between news type and the amount of delay in announcing the news, In the case of quarterly forecasts of annual earnings. The initial expectation was that consistent with the pattern of "good news early, bad news, late", negative EPS adjustments are announced with more delay. In accordance with results of previous studies, it became clear that there is an inverse relationship between the news type and the amount of delay in announcing the news of quarterly forecasts of annual earnings, So that firms with negative adjustments in EPS forecasts, on average, have approximately 12 days further delay in announcing the forecast. Furthermore, it became clear the magnitude of negative adjustments has a negative relation with the amount of delay in announcement. Examining other variables showed that with increasing the coverage percentage, as a sign of success of company performance, the amount of delay in announcing forecasts decreases. However, companies that announce losses per share, on average, have an additional delay of about 6 days. The results obtained also indicate that in some industries, there is a special time for reporting. Finally, it found that that in the period after the adoption of new disclosure instruction in TSE, despite increasing the deadline, delay in announcing quarterly forecasts of annual earnings has decreased, on average, by about 2 days. These findings could help regulators for setting better regulations in the capital market. We showed that managers have a so-called opportunistic strategy for announcing their earnings news. A reason for this behavior could be trying to attract less attention to bad news and avoid its undesirable consequences. What is their real intention and whether this strategy is successful to reach that goal, could be the subject for further research. It seems the results would be different based on the degree of efficiency of the market. 7 References Aubert, F. (2009). Determinants of corporate financial disclosure timing: the French empirical evidence, Journal of Accounting and Taxation, 1(3), 053-060. 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Disclosure timing: Determinants of quarterly earnings release dates, Journal of Accounting and Public Policy, 23, 457-482, http://dx.doi.org/10.1016/j.jaccpub-pol.2004.10.001 Skinner D. (1994). Why Firms Voluntarily Disclose Bad News. Journal of Accounting Research, 32(1), 38-60, http://dx.doi. org/10.2307%2F2491386 Tehran Stock Exchange instruction for information disclosure by Listed companies, 2002 (modified: 2007). Available at: http:// www.tse.ir/ Yaar Mohammadi, A., (2001). Examining determinants of timely interim reporting in Tehran Stock Exchange listed companies, MSc dissertation, Tarbiat Moderress University, Iran. Mahdi Moradi is an Associate Professor of Accounting, Ferdowsi University of Mashhad, Iran, He has more than 20 years academic experiences in Iran. So far, he has published more than 27 papers in international journals and 12 papers in national journals in Persian. His research interests include financial reporting, ERP and auditing. Mahdi Salehi is an Assistant Professor of Accounting, Ferdowsi University of Mashhad, Iran. He has more than 8 years of academic experience. So far, he has published more than 165 papers in international journals, his interests include: auditing, audit expectation gap, and financial distress prediction. Seyyed Saeed Mehrdad Ayask has obtained his M.A in Accounting from the Ferdowsi University of Mashhad, Iran. Currently he is doing his PhD in Accountancy at the Isfahan University, Isfahan, Iran. Povezava med zakasnitvijo objave četrtletnih napovedi dohodka in vsebino objave Cilj prikazane raziskave je v specifičnem kontekstu proučiti povezavo med zakasnitvijo objave četrtletnih napovedi dohodka in vsebino objave. Uporabili smo multiplo regresijsko analizo, podatke, ki jih je zbral programski paket Rahavard Novin, in finančna poročila podjetij. V skladu z vzorcem »dobre novice prej, slabe kasneje« ugotavljamo, da obstaja pozitivna povezava med vrsto slabe novice in velikostjo zakasnitve pri objavi prognoze letnih zaslužkov. Firme, pri katerih so napovedi zaslužka negativne (slabe novice) so objavljene s poprečno zakasnitvijo 12 dni. Če upoštevamo še druge spremenljivke, je pokazalo naslednje: če se poveča odstotek pokritja - znak uspešnosti - je zakasnitev manjša, toda pri firmah z izgubo se zakasnitev poveča za dodatnih približno 6 dni. Dobljeni rezultati tudi kažejo, da je za nekatere gospodarske panoge uveljavljen nek čas za poročanje. Ključne besede: Zakasnitev, poročanje, četrtletna prognoza, letni dohodek na delnico