An exploration of the relationship between language choice in CEO letters to shareholders and corporate reputation

Abstract

This paper proposes a taxonomy to assist in more clearly locating research on aspects of the association between corporate reputation and corporate accountability reporting. We illustrate how our proposed taxonomy can be applied by using it to frame our exploration of the relationship between measures of reputation and characteristics of the language choices made in CEO letters to shareholders. Using DICTION 5.0 software we analyse the content of the CEO letters of 23 high reputation US firms and 23 low reputation US firms. Our results suggest that company size and visibility each have a positive influence on the extent to which corporate reputation is associated with the language choices made in CEO letters. These results, which are anomalous when compared with those of Geppert and Lawrence (2008), highlight the need for caution when assessing claims about the effects on corporate reputation arising from the language choice in narratives in corporate annual reports.

Keywords:

• CEO
• DICTION
• Impression management
• Language
• Letter to shareholders
• Reputation
• Taxonomy

Acknowledgment

The authors thank Doris Merkl-Davies for her creative input to the taxonomy reported in this paper.

Notes

2 The companies not included were Albertsons, Caremark, Johnson Control, Delphi, International Paper, Hospital Corporation of America, Sysco and Washington Mutual.

3 These were Altria, American Express, AT and T, Bank of America, Berkshire Hathaway, Caterpillar, Chevron, Costco, Deere, DuPont, Fedex, GE, IBM, Intel, Johnson and Johnson, Lowe’s, Medco Health, Morgan Stanley, Proctor and Gamble, Target, UPS, Walt Disney and Wellpoint.

4 These were AIG, AmeradaHess, Amerisourcebergen, Archer Daniels, Boeing, Citigroup, CVS, Dell, Ford, General Motors, Merrill Lynch, MetLife, Nationwide, Northrop Grumman, Pfizer, Sears, Sprint Nextel, State Farm, Sunoco, TIAA-CREF, Time Warner, Tyson Foods and Wachovia.