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

Kris Boudt, James Thewissen*

*Corresponding author for this work

Research output: Contribution to JournalArticleAcademicpeer-review

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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.

Original languageEnglish
Pages (from-to)77-115
Number of pages39
JournalFinancial Management
Issue number1
Early online date24 Feb 2018
Publication statusPublished - Mar 2019


This research was carried out and thanks to financial support of the Intercollegiate Center for Management Science, the Junior Mobility Program of the KU Leuven, and the Dutch science foundation. We thank Bing Han (Editor), an anonymous referee, Ronald Anderson, David Ardia, Özgür Arslan-Ayaydin, Vasiliki Athanasakou, Peter de Goeij, Joseph Faello, Alexandre Garel, Elaine Henry, Edyta Korpas, Ann Murphy, Giang Nguyen, Nitish Ranjan Sinha, Richard Taffler, Geert Van Campenhout, and Cynthia Van Hulle for their valuable comments, as well as the participants at the 2017 Cass Business School and CeFARR conference (London, UK), 2016 World Finance Conference (New York City, USA), 2016 CAAA (St. John’s, Canada), 2016 AFFI (Liège, Belgium), 2016 VVE day (Antwerp, Belgium), 2016 Accounting Research Day (Gent, Belgium), 14th International Pragmatics Conference (Antwerp, Belgium), 2015 Southwestern Finance Association (Houston, USA), 2015 Midwest Finance Association (Chicago, USA), and 2014 R/Finance and the 2014 International Conference on Discourse Approaches to Financial Communication (Ascona, Switzerland). We would also like to thank the participants of the seminars held at the Université Laval (Québec, Canada), Katholieke Universiteit Leuven (Leuven, Belgium), Stevens Institute of Technology (Hoboken, USA), Université de Neuchâtel (Neuchâtel, Switzerland), and Cass Business School (London, UK). This paper won the 2014 Centro Stefano Franscini Award for best paper at the 2014 International Conference on Discourse Approaches to Financial Communication, Ascona (Switzerland), and the Award for best paper at the 2014 R/Finance conference, Chicago. Part of this research was done while the second author was visiting the Department of Finance at the University of Illinois at Chicago and the Stevens Institute of Technology.

FundersFunder number
Intercollegiate Center for Management Science
Nederlandse Organisatie voor Wetenschappelijk Onderzoek
KU Leuven


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