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Jockeying for Position in CEO Letters: Impression Management and Sentiment Analytics

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Listed:
  • Kris Boudt
  • James Thewissen

Abstract

This paper evidences the strategic positioning of positive and negative words within a CEO letter as a subtle form of impression management. We find that managers tend to present information in such an order that the reader of the CEO letter has a more positive perception of the underlying message. We uncover a smile in the frequency of positive words within the letter, and a half smile in the intratextual distribution of negative words, with a prevalence of negative words at the beginning of the letter. We also find a significant positive association between this qualitative impression management and the use of abnormal accruals in earnings management. We propose sentiment analytics that can compensate for the strategic management of narrative structure and find that the proposed position weighted sentiment has more predictive power for the firm performance over the next year.

Suggested Citation

  • Kris Boudt & James Thewissen, 2019. "Jockeying for Position in CEO Letters: Impression Management and Sentiment Analytics," Financial Management, Financial Management Association International, vol. 48(1), pages 77-115, March.
    • Handle: RePEc:bla:finmgt:v:48:y:2019:i:1:p:77-115
    DOI: 10.1111/fima.12219
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    References listed on IDEAS

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