CEO letters as legitimacy builders: coupling text to numbers

Abstract

Purpose -The purpose of this paper is to describe and interpret the CEO letter in the annual reports of three multinational Swedish companies. This study focuses on the CEOs' comments on accounting principles and rules, on company decisions and actions, and on external events. Examination of CEO letters reveals how CEOs make themselves accountable to readers and establish their own and their companies' legitimacy. Design/methodology/approach -A strategic design was used to select the three companies;.the three criteria used in making the selection were company nationality, age, and stock market listing. A fourth criterion was that the company had been a nominee in the Stockholm Stock Exchange "Best Annual Report" contest. Based on a social constructivist approach, with inspiration from the field of discourse psychology, a discursive action model (DAM) is applied in this research. Findings -The analysis shows that the CEO letters at two of the three companies do not emphasize numbers and text. In the third company's CEO letters, the numbers are an important component and are balanced with text. It was found that one explanation of the CEO letter format is the CEO's wish to persuade readers of the company's legitimacy, excellence, and future survival. The CEO letter is intended to strengthen readers' confidence in the company. Originality/value -This paper provides insight into how CEOs use CEO letters in annual reports to craft a corporate image for readers.

CEO letters: Hospitality corporate narratives during the COVID-19 pandemic

“…This study only focused on textual data in written CEO letters and thus may not fully represent an organizational rhetoric and impression management strategies. For example, CEO letters or other corporate documents involve audiovisual data, numbers, or images that might invoke a mixture of emotional and cognitive responses from an audience ( Cheney and McMillan, 1990 ; Jonäll and Rimmel, 2010 ). Thus, a thorough analysis of various formats of the data would be useful for an in-depth understanding.…”

“…CEO letters refer to any documents signed by CEOs or using their names that are published for various audiences, including letters to shareholders, CEO’s messages, and statements to customers, employees, or the public ( Jonäll and Rimmel, 2010 ). It contains a CEO’s vision and focus of strategies, a company’s competitive advantages and achievements, and sharing threats and opportunities in the business environment ( Patelli and Pedrini, 2015 ).…”

“…The studies found the role of the letters to be a proxy of organizational outcomes. Specifically, research found that the language used in CEO letters is closely associated with an organization’s accountability, reputation, image ( Craig and Brennan, 2012 ), performance ( Cong et al, 2014 ), and organizational legitimacy builder ( Jonäll and Rimmel, 2010 ). CEO letters become powerful rhetoric devices during a crisis because the letters reflect organizations’ attempts at symbolic influence ( Cheney and McMillan, 1990 ).…”

“…CEOs, as symbolic figureheads of organizations, play a key role in promoting the organizational image and reputation ( Ginzel et al, 2004 ). CEO letters, one type of corporate narratives, aim to convince readers of an organization’s “legitimacy, excellence, and survival” (p.307) and to ultimately improve readers’ confidence in the organization ( Jonäll and Rimmel, 2010 ). Thus, the language in CEO letters is critical in presenting a company’s vision, strategic directions, and responses to certain situations ( Jonäll and Rimmel, 2010 ).…”

“…CEO letters, one type of corporate narratives, aim to convince readers of an organization’s “legitimacy, excellence, and survival” (p.307) and to ultimately improve readers’ confidence in the organization ( Jonäll and Rimmel, 2010 ). Thus, the language in CEO letters is critical in presenting a company’s vision, strategic directions, and responses to certain situations ( Jonäll and Rimmel, 2010 ). CEO letters become more valuable storytelling devices during a crisis since the letters capture organizational approaches and responses to the crisis ( Cong et al, 2014 ).…”