The antecedents, moderators, and consequences of CEO impression management

Abstract

To explore how CEOs justify organizational performance to shareholders, this study utilized content analysis of 250 CEOs' letters found in annual reports to shareholders. Results suggest that CEOs disclose a higher proportion of negative information and a lower proportion of positive information to the extent that their company performs poorly. CEOs used more total causal attributions and more external attributions to the extent that their company performed poorly. Variables such as CEO turnover and percentage of outside shareholders were found to moderate the relationship between performance of a company and the impression management techniques used in the CEO's letter. CEO turnover and percentage of outside shareholders moderated the relationship between performance and disclosures. A stronger correlation of negative disclosures with company was found when there was high CEO turnover than when turnover was low. Also, a stronger correlation between these two variables was found when there was a higher proportion of outside shareholders. Results additionally indicate that impressions of the company differ depending on the type of language utilized within the report. That is, subjects had more positive impressions of a CEO and company to the extent that the CEO disclosed positive information and utilized visionary language in the CEO's letter. These results provided partial support for the hypotheses that CEOs are influenced by previous corporate performance and the type of constituency in the letter of the annual report and that the wording of the letter influences impressions of the company.