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Strategic communication through the world wide web: an empirical model of effectiveness in the ceo’s letter to shareholders

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  • Albert H. Segars
  • Gary F. Kohut

Abstract

Many organizations are devoting enormous amounts of financial and human resources to improve corporate communications. Among the many forms of communication produced by firms, the Chief Executive Officer’s (CEO) letter to shareholders is perhaps the most strategic in conveying the well‐being and future direction of the enterprise. These letters have become even more visible with the advent of World Wide Web and its use as a primary forum for communicating the CEO’s message. Surprisingly, there has been little research into dimensions that characterize the effectiveness of the CEO’s letter and how this communication may benefit the overall enterprise in terms of improved financial position. Utilizing both theoretic and practical perspectives as well as the web‐based letters of prominent organizations, this study frames CEO’s letter effectiveness (CLE) along dimensions of credibility, efficacy, commitment, and responsibility. These first‐order constructs appear to be statistically coaligned by a second‐order construct of CLE. In turn, CLE is shown to be directly associated with favourable financial performance in terms of share price and trading activity. This study provides a useful framework for assessing strategic communication through the CEO’s letter and for operationalizing a key dependent variable in future studies related to strategic corporate communications through digital media.

Suggested Citation

  • Albert H. Segars & Gary F. Kohut, 2001. "Strategic communication through the world wide web: an empirical model of effectiveness in the ceo’s letter to shareholders," Journal of Management Studies, Wiley Blackwell, vol. 38(4), pages 535-556, June.
    • Handle: RePEc:bla:jomstd:v:38:y:2001:i:4:p:535-556
    DOI: 10.1111/1467-6486.00248
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    Cited by:

    1. Seo Gang-Hoon & Itoh Munehiko & Li Zhonghui, 2021. "Strategic Communication and Competitive Advantage: Assessing CEO Letters of Global Airline Alliances," Foundations of Management, Sciendo, vol. 13(1), pages 57-72, January.
    2. Johannes Brunzel, 2023. "Linguistic cues of chief executive officer personality and its effect on performance," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(1), pages 215-243, January.
    3. Hyung Jong Na & Kun Chang Lee & Seung Uk Choi & Seong Tae Kim, 2020. "Exploring CEO Messages in Sustainability Management Reports: Applying Sentiment Mining and Sustainability Balanced Scorecard Methods," Sustainability, MDPI, vol. 12(2), pages 1-21, January.
    4. Thomas Carrington & Gustav Johed, 2007. "The construction of top management as a good steward," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 20(5), pages 702-728, September.
    5. Lorenzo Patelli & Matteo Pedrini, 2015. "Is Tone at the Top Associated with Financial Reporting Aggressiveness?," Journal of Business Ethics, Springer, vol. 126(1), pages 3-19, January.
    6. Denise Fischer-Kreer & Andrea Greven & Isabel Catherine Eichwald & David Bendig & Malte Brettel, 2021. "Organizational Psychological Capital in Family Firms: the Role of Family Firm Heterogeneity," Schmalenbach Journal of Business Research, Springer, vol. 73(3), pages 413-441, December.
    7. Lorenzo Patelli & Matteo Pedrini, 2014. "Is the Optimism in CEO’s Letters to Shareholders Sincere? Impression Management Versus Communicative Action During the Economic Crisis," Journal of Business Ethics, Springer, vol. 124(1), pages 19-34, September.
    8. Hyung Jong Na & So Ra Kim & Hyun Jin Jo, 2022. "Integrating Text-Mining and Sustainability Balanced Scorecard Methods to Examine the Relationship between CEO Messages of Homepages and Firm Value: Emphasis on Fashion Companies in South Korea," Sustainability, MDPI, vol. 14(22), pages 1-25, November.
    9. Jaeger, Nikolai A. & Zacharias, Nicolas A. & Brettel, Malte, 2016. "Nonlinear and dynamic effects of responsive and proactive market orientation: A longitudinal investigation," International Journal of Research in Marketing, Elsevier, vol. 33(4), pages 767-779.
    10. Jiao Ji & Oleksandr Talavera & Shuxing Yin, 2018. "The Hidden Information Content: Evidence from the Tone of Independent Director Reports," Working Papers 2018-28, Swansea University, School of Management.
    11. Rahma Chekkar, 2005. "Communication Financiere Et Analyse De Discours. Une Reflexion Methodologique Autour Du Cas Saint-Gobain," Post-Print halshs-00581152, HAL.
    12. Paul Ziek, 2009. "Making sense of CSR communication," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 16(3), pages 137-145, May.
    13. Saverio Bozzolan & Giovanna Michelon & Marco Mattei & Andrea Giornetti, 2019. "Signing the letter to shareholders: Does the Signatory?s role relate to impression management?," FINANCIAL REPORTING, FrancoAngeli Editore, vol. 2019(1), pages 37-82.
    14. Mark A. Clatworthy & Michael John Jones, 2006. "Differential patterns of textual characteristics and company performance in the chairman's statement," Accounting, Auditing & Accountability Journal, Emerald Group Publishing, vol. 19(4), pages 493-511, July.
    15. Grøgaard, Birgitte, 2012. "Alignment of strategy and structure in international firms: An empirical examination," International Business Review, Elsevier, vol. 21(3), pages 397-407.
    16. Stéphane Onnee & Rahma Chekkar, 2005. "L'évolution de la communication financière dans le processus de gouvernance : le cas Saint-Gobain," Working Papers 2005-5, Laboratoire Orléanais de Gestion - université d'Orléans.

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