Factors influencing the use of ceo letters as a strategy for impression management
DOI:
https://doi.org/10.16930/2237-766220253591Keywords:
CEO Letters, Impression Management, Tone, ReadabilityAbstract
This study aimed to investigate the factors influencing the use of CEO letters as a tool for Impression Management in the Brazilian capital market. Based on the Voluntary Disclosure Theory, a sample of 1,274 letters published between 2010 and 2022 by 217 listed companies that released at least one letter during this period was analyzed. The chosen time frame is justified by its occurrence after the adoption of International Financial Reporting Standards (IFRS) in Brazil, which enhanced the comparability of financial information. Panel data models were employed, with two dependent variables: tone (the proportion of positive and negative terms) and readability (total number of words), both serving as proxies for impression management. The main explanatory variables were changes in financial performance and the presence of market analysts. The results indicate that declines in performance did not significantly influence tone or readability, suggesting that in Brazil, CEO letters are not used to conceal poor results. In contrast, positive performance increased the use of positive terms, signaling reinforcement of the institutional image. The presence of analysts had a significant effect, acting as an external governance mechanism that inhibits opportunistic practices. Finally, leverage and economic crises showed a negative relationship with the impression management proxies, suggesting more objective communication in adverse scenarios. The study contributes by demonstrating that, in the Brazilian context, CEO letters tend to serve a legitimate informative role, especially during periods of favorable performance.
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