Abstract

http://ssrn.com/abstract=2131476
 
 

Citations (2)



 


 



Using Shareholder Letters to Measure CEO Integrity


Shane S. Dikolli


Duke University - Fuqua School of Business

Thomas Keusch


INSEAD

William J. Mayew


Duke University - Fuqua School of Business

Thomas D. Steffen


Yale University School of Management

June 23, 2016


Abstract:     
We forward and validate a linguistically-derived measure of CEO integrity. We contend low-integrity CEOs lack credibility when communicating, which creates a demand for explanations beyond that created by firm-specific or other CEO characteristics. We capture the supply of such explanations by low-integrity CEOs via relatively excessive explanations in the annual shareholder letter. Using shareholder letter causation words to measure variation in explanations, we find low-integrity CEOs receive lower integrity ratings from subordinates, are perceived unfavorably by employees generally, are more likely to receive a tone-at-the-top material weakness and a higher fee from their auditor, provide lower quality accruals prior to Sarbanes-Oxley, are more likely to receive backdated options, and have inferior future firm performance.

Number of Pages in PDF File: 80

Keywords: Integrity, Performance evaluation, Behavioral traits, Linguistic textual analysis

JEL Classification: M40, J10


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Date posted: August 18, 2012 ; Last revised: June 28, 2016

Suggested Citation

Dikolli, Shane S. and Keusch, Thomas and Mayew, William J. and Steffen, Thomas D., Using Shareholder Letters to Measure CEO Integrity (June 23, 2016). Available at SSRN: http://ssrn.com/abstract=2131476 or http://dx.doi.org/10.2139/ssrn.2131476

Contact Information

Shane Sami Dikolli (Contact Author)
Duke University - Fuqua School of Business ( email )
100 Fuqua Drive
Box 90120
Durham, NC 27708-0120
United States
919-660-1949 (Phone)
919-869-1901 (Fax)
Thomas Keusch
INSEAD ( email )
Boulevard de Constance
77305 Fontainebleau Cedex
France

William J. Mayew
Duke University - Fuqua School of Business ( email )
Box 90120
Durham, NC 27708-0120
United States
919-660-7781 (Phone)
919-660-7971 (Fax)
HOME PAGE: http://www.fuqua.duke.edu/faculty/alpha/mayew.htm
Thomas D. Steffen
Yale University School of Management ( email )
135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States

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