Impression management strategies in the Letter to Shareholders: empirical evidence from Italian listed firms

The importance of the Letter to Shareholders (LS) as a form of corporate communication is well documented in the previous literature. However, existent contributions also suggest that LS are used opportunistically by firms as locus of Impression Management (IM) strategy, possibly because of their voluntary and unregulated nature. The aim of this study is to assess whatever Italian firms use LS to convey a manipulated view of firms’ behaviour. In particular, the paper verifies if unprofitable firms adopt a biased language in the LS manipulating the textual characteristics of these letters. A manual content analysis and a multivariate statistical analysis are run analysing the disclosure offered in all the LS made available by Italian listed firms referring to year 2013. The key results show that firms tend to use biased language to obfuscate their weak achievements, thus demonstrating that firms adopt IM in their LS. The evidence has relevant implications as we show that LS cannot be considered informative but rather than as a communication strategy to advance corporate image.