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

Kris Boudt, James Thewissen

Research output: Contribution to JournalArticleAcademicpeer-review

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.

LanguageEnglish
JournalFinancial Management
DOIs
StateAccepted/In press - 2019

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Sentiment
Chief executive officer
Impression management
Smile
Predictive power
Strategic positioning
Firm performance
Strategic management
Managers
Earnings management
Abnormal accruals

Cite this

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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.",
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Jockeying for Position in CEO Letters : Impression Management and Sentiment Analytics. / Boudt, Kris; Thewissen, James.

In: Financial Management, 2019.

Research output: Contribution to JournalArticleAcademicpeer-review

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