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
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
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.
MethodologyAnalysis of effectiveness of letter to shareholders based on quantitative measures.
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.
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
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
Parameters Contd… Number of jargons used Number of Difficult words You Orientation Positive/ Negative tone Direct/ Indirect Approach Requesting/Demanding
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.
You Orientation Some Organizations are rigid to their writing methodology whereas some changes No clear evidence of variation over the years
Positive / Negative tone Average rating was above 3.5 For 2008 : 3.81 For 2009 : 3.88 For 2010 : 3.91
Analyzing Change in Passivity of letter Average Passive sentences 2008 : 81 2009 : 35 2010 : 42
Number of jargons Use of jargons decreased Clarity and readability increased
Difficult words used No particular trend No conclusion
ConclusionThe study helped us analyze the various factors contributing to the effectiveness of communication in CEO’s letter to shareholders.
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
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
Conclusion contd..These parameters affects tone used in the letter,Determines how easy it is to read and understand the reportChanges in the style of communication with changing market. conditions that affect company’s performance.
Thank You .If you have any questions Please ask