Factors associated with the publication of a CEO letter
Corporate Communications: An International Journal
ISSN: 1356-3289
Article publication date: 7 October 2013
Abstract
Purpose
In most European code-law oriented Latin countries, the publication of a CEO's letter to shareholders in a company's annual report is a fairly recent phenomenon. In this paper, the authors seek to determine the characteristics that explain why companies in one such country, i.e. Portugal, published a CEO letter.
Design/methodology/approach
The paper's holistic theoretical framework draws on elements of agency theory, institutional theory and signalling theory. To understand the characteristics of Portuguese holding companies that published CEO letters, the authors used a logistic regression model to explore 266 observations over the years 2006-2011.
Findings
The publication of a CEO letter becomes more likely if a firm is audited by a Big 4 accounting firm; has a higher level of profitability; and has a high number of foreign subsidiaries. Other findings are that finance companies are slightly more likely to publish a CEO letter than non-finance companies. The number of CEO letters increased to a peak in 2008, and then declined.
Practical implications
The increasing number of companies now publishing a CEO letter raises the concern for regulatory authorities of whether the content of the CEO letter should be audited, since any numbers presented in the management report have to be audited in Portugal.
Originality/value
To the best of the authors' knowledge this is the first empirical exploration of the characteristics that explain why companies publish a CEO letter. Mimetic and normative isomorphism is revealed to be a potentially important influence, since there is a tendency of companies audited by Big 4 accounting companies, and with foreign subsidiaries, to publish a CEO letter.
Keywords
Acknowledgements
The research is financed by National Funds through FCT – Foundation for Science and Technology – within the project PEst-OE/EGE/UI4021/2011.
Citation
Andreia Costa, G., Cristina Oliveira, L., Lima Rodrigues, L. and Craig, R. (2013), "Factors associated with the publication of a CEO letter", Corporate Communications: An International Journal, Vol. 18 No. 4, pp. 432-450. https://doi.org/10.1108/CCIJ-07-2012-0045
Publisher
:Emerald Group Publishing Limited
Copyright © 2013, Emerald Group Publishing Limited