Abstract Book of the 10th International Conference on Research in Business, Management and Economics
Year: 2025
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Narrative Analyses of Letters to Shareholders in the Period Leading up to Voluntary Delisting – an Emerging Economy Perspective
Leana Esterhuyse, Reuben Madavha
ABSTRACT:
Prior research indicates that Letters to Shareholders (LtS) can serve as tools for impression management. Unlike audited annual financial statements, LtS are not subject to formal regulatory oversight, making them susceptible to selective framing and obfuscation. Shareholders who rely on communications to assess company performance may thus be misled. Companies delist voluntarily (e.g., going private) or involuntarily (e.g., breaches of listing rules). We analysed the narrative styles employed in LtS during the five years leading up to companies’ voluntary delistings from the Johannesburg Stock Exchange (JSE). The delistings were announced between January 2016 and December 2019. The study employs content analysis, using DICTION software, to examine five narrative dimensions: Activity, Optimism, Certainty, Realism, and Commonality. This software enhances reliability by providing standardised results. Company data, including industry sector and market capitalisation, were sourced from the IRESS database. Non-parametric tests were conducted on 189 LtS. The most used narrative tone was Optimism, and the least used tone was Certainty. This narrative approach is most likely used to inspire confidence with the decision to ‘go private’. The findings revealed variations in the narrative strategies employed in the LtS of delisted firms compared to DICTION’s normative base (companies listed). However, within the sample of delisted companies, no statistically significant differences were found across four industry sectors or in the five years leading up to the voluntary delisting announcement. We argue that within the population of companies that decide to delist voluntarily, normative institutional isomorphism plays a role, explaining the lack of differences observed within this sample. These insights contribute to the limited research on communication styles in voluntary disclosures (LtS) in emerging markets and highlight potential regulatory concerns. Regulators and institutional shareholders could employ inexpensive textual analysis tools to detect potential impression management strategies that may harm shareholder interests.
Keywords: corporate communication; Diction software; impression management; South Africa; voluntary disclosures