Communication analysis of letter to shareholders.

1. Vikram Dahiya
IIM-Rohtak

2. INTRODUCTION
 Communicating the annual results is the most important
activity in any organisation
 Textual analysis on letter to shareholders of three
consecutive years from 21 ‘BSE 100’ companies to

3. Purpose
 Effectiveness of letter to shareholders on certain
quantifiable parameters
 How these factors vary with changing market condition
s thereby affecting the communication
 Shareholders ease of understanding
 Shareholders association with the organization
 Parameters on which a shareholder gives the credentials

4.  Analysing the kind of tone used in the letter
 Change in the style of communication with changing
market conditions that affect company’s performance
 Average of each quantifiable parameter is used as the final
data to derive the conclusion
 Various parameters are thus plotted on different histograms
on yearly basis for the financial year 2008, 2009 and 2010.

5. Methodology
Analysis of effectiveness of letter to shareholders based on
quantitative measures.

6. Gathering Information
 The letter to shareholders is an important part of an
annual report.
 Annual reports for three consecutive sessions
2008-2009 , 2009-2010 and 2010-2011
of 21 companies from the BSE 100 index were collected.

7. List of Companies
• Wipro •Reliance Communications •Ranbaxy Laboratories
•Reliance Natural •Steel Authority of India
• Zee Entertainment Ltd.
• USL •Reliance Petroleum
•Sterlite Industries
• United Phosphorus •Reliance Infrastructure
•Suzlon
• TCS •Reliance Power
•Tata Motors
• Punjab National Bank
•Reliance Industries
• State Bank of India •Tata Tea
•Reliance Capital
•Unitech

8. PARAMETERS
 Content Analysis of letters was done based on 11 parameters.
( Parameters are derived from a study by Karen S. Sterkel on writing
styles in business communication)
 Active /Passive Sentences
 Number of paragraphs
 Number of words
 Number of sentences
 Average Length of sentences

9. Parameters Contd…
 Number of jargons used
 Number of Difficult words
 You Orientation
 Positive/ Negative tone
 Direct/ Indirect Approach
 Requesting/Demanding

10.  Every letter was evaluated by all the members of the group.
 Hence, 5 sets of data so obtained were merged into 1 by
averaging the value for each parameter for every letter.
 Statistical tools and techniques were then applied on these
averaged values to draw inferences.

12. FINDINGS

13. You Orientation
 Reflects
 management’s empathy towards the shareholders.
 their concerns and affect the management equally.

14. Positive / Negative tone
 Conveys
 the well being of the company
 future direction of an organization

15. Changing Passivity of letter
 Passive sentence
 When the receiver of action is more important
 When the going gets tough, the tough get going

16. Number of jargons
 Jargon
 special words or phrases used within a group trade or
profession.

17. Difficult words used
 It is indicator of the readability of the letter.
 It is subjective.

18. DISCUSSIONS

19. You Orientation
 Some Organizations are rigid to their writing methodology whereas
some changes
 No clear evidence of variation over the years

20. Positive / Negative tone
 Average rating was above 3.5
 For 2008 : 3.81
 For 2009 : 3.88
 For 2010 : 3.91

21. Analyzing Change in Passivity of letter
 Average Passive sentences
 2008 : 81
 2009 : 35
 2010 : 42

22. Number of jargons
 Use of jargons decreased
 Clarity and readability increased

23. Difficult words used
 No particular trend
 No conclusion

24. Conclusion
The study helped us analyze the various factors contributing to the
effectiveness of communication in CEO’s letter to shareholders.

25. Conclusion contd..
 Positive tone
 Most companies focus on having a positive tone.
 Positive tone improved from 2008 to 2010
 You orientation
 high you orientation in the letter to shareholders reflects
management’s empathy towards the shareholders
 Increase in crisis period

26. Conclusion contd..
 Number of passive sentences
 Number of difficult word
 Number of jargon used
 indicate the ease of readability
 decreases from 2008 to 2010
 Number of words , sentences paragraphs and average length of
sentence

27. Conclusion contd..
These parameters affects tone used in the letter,
Determines how easy it is to read and understand the report
Changes in the style of communication with changing market.
conditions that affect company’s performance.

28. Thank You .
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