Communication in CEO Letters before, during and after the Great Financial Crisis in 2008 -A study of two companies in the real estate industry in Sweden

Abstract: Background and problem discussion: In 2008 a financial crisis was set off by the burst of a real estate bubble. For many private stakeholders the crisis came more or less as a surprise since they had not anticipated that something like this could occur. Since many rely on the information stated in the annual reports of the companies it is important that this information is relevant and reliable. One of the three most read parts in annual reports are the CEO letters - personal letters written by the CEOs. There has been a debate about the usefulness of the information stated in these CEO letters. Does it give a true and fair view of the company or is it just a rhetorical tool to convince stakeholders? As a stakeholder it is important to be able to rely on all the information given in annual reports, both in good times and in bad times. Considering this the authors find it interesting to examine how the communication in CEO letters differs before, during and after the crisis and how it reflects the financial result. Purpose: The purpose is to study the CEO letters of two Swedish real estate companies and examine how the communication differs and how it reflects the financial results before, during and after the great financial crisis in 2008. Methodology: A textual analysis was performed on three CEO letters each, of two Swedish real estate companies, Fabege and Castellum. Two kinds of methods for textual analysis were used – content analysis and rhetorical analysis. Results and conclusions: The communication did change when the financial crisis occurred but how it differed was not entirely the same in the examined companies. Fabege became more personal and disclosed more while Castellum became less personal with less disclosure during the financial crisis. Still, some similarities were observed. There was no tendency of any of the companies communicating more responsibility during the crisis but instead they both blamed their operational environment for the poor outcomes in greater extent. Both also made greater attempts to engage the readers and create interest during and after the crisis. The theoretical framework could not explain all differences – the authors found that other factors than the financial outcomes affected the communication. How the information stated in the CEO letters reflected the financial results also differed throughout the years. During the crisis financial results were not reflected as objectively as when outcomes were positive.