An Analysis of the Readability and Style of Letters to Stockholders

Abstract

One of the most effective communication links between corporate management and investors is the annual report. The letter to the shareholders in the report exemplifies the one-on-one communication attempt by chief executive officers and other high level executives with owners. This article examines thirty shareholder letters written by executives who are classified as highly successful based on their own annual salaries and/or the return to shareholders or company performance. The researchers found the letters written by these successful executives to fall within accepted readability levels. The letter writers adhere to convention in the use of numbers and the use of compound adjective. Section headings are not frequently used. The tone of the opening paragraph is usually equivocal or positive even though the first sentences frequently reflect a lack of “you attitude.” In general, the reports written by these successful executives conform to modern-day standards.