The Informativeness of Impression Management – Financial Analysts and Rhetorical Style of CEO Letters

This paper investigates the informativeness of rhetorical impression management patterns of CEO letters. We identify three holistic style patterns (assertive acclaiming, cautious plausibility-based framing and logic-based rationalizing) and examine the relationship of each composite linguistic style feature and the properties of earnings forecasting behaviour of security financial analysts, such as the forecast dispersion and accuracy. The results show that assertive rhetorical impression management in CEO letters is negatively related with the dispersion of financial analysts' earnings forecasts and positively with earnings forecast accuracy. CEOs' use of a rationalizing rhetorical pattern tends to decrease the dispersion of financial analysts' earnings, whereas a cautious plausibility-based rhetorical position is marginally instrumental in getting more accurate earnings predictions. Our results are robust to alternative model specifications and a set of covariates. While impression management communication is often theorized as manipulative and void of real information content, this paper evidences that impression management serves both self-presentation and information-sharing purposes. These findings suggest that the information-sharing and self-presentation objectives of impression management are not necessarily mutually exclusive