Strategic communication through the World Wide Web: An empirical model of effectiveness in the CEO's letter to shareholders

Many organizations are devoting enormous amounts of financial and human res ources to improve corporate communications. Among the many forms of communi cation produced by firms, the Chief Executive Officer's (CEO) letter to sha reholders is perhaps the most strategic in conveying the well-being and fut ure direction of the enterprise. These letters have become even more visibl e with the advent of World Wide Web and its use as a primary forum for comm unicating the CEO's message. Surprisingly, there has been little research i nto dimensions that characterize tile effectiveness of tile CEO's letter an d how this communication may benefit the overall enterprise in terms of imp roved financial position. Utilizing both theoretic and practical perspectiv es as well as the web-based letters of prominent or organizations, this stu dy frames CEO's letter effectiveness (CLE) along dimensions of credibility, efficacy, commitment, and responsibility. These first-order constructs str ucts appear to be statistically coaligned by a second-order construct of CL E. In turn, CLE is shown to be directly associated with favourable financia l performance in terms of share price and trading activity. This study prov ides a useful framework for assessing strategic communication through tile CEO's letter and for operationalizing a key dependent variable in future st udies related to strategic corporate communications through digital media.