A CEO’s words are powerful
storytelling tools, fashioning opinions and
offering an important point of view. In an era of
heightened corporate accountability, when
companies and their CEOs are subject to ever
increasing scrutiny by audit committees,
regulatory authorities and the public, CEOs
frequently need to be reminded of the power of
their CEO-speak—the language they use in speeches,
letters to shareholders, press releases and other
In our experience
some CEOs have found the public communication of
accounting information to be troublesome. While
CPAs aren’t generally responsible for corporate
communications, they can help improve the words
and images CEOs and other members of senior
management use to convey accounting information.
CPAs who serve as CFOs may take a more direct role
in providing advice to CEOs on business language.
But there are many indirect opportunities for
other CPAs to influence a CEO’s business
communications as well.
A GUIDANCE CHECKLIST FOR CPAs
The increased use of Web sites for corporate
communication has intensified the level of public
scrutiny of companies and CEOs. When a CEO’s words
are posted on the Internet they become widely
accessible, reaching a worldwide audience of
billions instantaneously. People can locate the
CEO’s words easily using a search engine, download
them quickly and analyze them using text-analysis
software. Here are some strategies we recommend
CPAs use to help senior management communicate
financial information more clearly to
Craft a coherent and consistent message.
CPAs can help management monitor
whether the words the company uses to describe
accounting and financial matters are coherent and
consistent across all settings—in MD&A
documents, regulatory filings, press releases and
speeches. The words written and uttered by a CEO
about accounting and financial reporting matters
should be consistent with the numerical data and
narrative disclosures in financial statements.
Develop the CEO’s financial literacy.
Help your CEO understand the
subtleties of accounting and the level of
skepticism required when interpreting financial
statements. Encourage management to be alert to
the words, images and language best suited to
describe the accounting measurements that arise
from the discretions permitted by GAAP.
Be careful of metaphors.
Remain alert to how unsuitable some
of the metaphors CEOs use are. In particular,
stress the distorting impact of a subtle but
insidious metaphor that has gained widespread
currency: “Financial statements are a
truth-telling lens.” This metaphor reinforces the
falsehood that there is one objective financial
reality regarding a company and invites the belief
that a single set of financial statements is an
unimpeachably true and faithful lens portraying
that reality. Such a view is unjustified because
of the vagaries of accounting rules, assumptions
and cost-allocation techniques. At best,
GAAP-based financial statements provide an opaque
portal to the corporation—one that requires
considerable skill to interpret and describe.
Beware of imprecise style.
Help highlight any abuses of words
or images in management’s commentary on accounting
matters. Draw attention to ambiguities, buzzwords,
clichés and euphemisms. Encourage CEOs to avoid
exaggeration, hubris, deceit, gibberish, technical
jargon, inappropriate metaphors and trite
platitudes. It’s also good to remind CEOs that the
language examples they provide set the tone for
the entire company—both internally and externally.
Their words permeate the company and gain even
broader currency if they are imitated by
politicians and the media.
Avoid the sounds of silence.
Encourage your CEO to write about
accounting and financial performance in a way that
is understandable, relevant, complete and honest.
Companies should make a concerted effort to be
evenhanded, to disclose the good news and the bad,
and to ensure there are no “silences” in
accountability disclosures. Reporting bad news may
not be easy for a CEO because of the possible
consequences to his or her reputation and the
company’s stock price. Help ease the difficulties
in reporting bad news by softening market
expectations where those expectations are
Ensure Web site transparency.
What a company posts on its Web site
is largely unregulated. Remind your CEO of his or
her responsibility to carefully monitor the design
of the company’s site. Does it facilitate full and
objective financial accountability, or is it
principally directed at manufacturing consent for
corporate activity? Be sure your CEO realizes how
easily public attitudes and behaviors can be
influenced by the positioning, content, size,
shape and color of hyperlinks. Many sites seem to
disclose bad news summarily or conceal hyperlinks
to make bad news difficult to find.
Encourage review and reflection.
No matter how experienced or
esteemed they are, all CEOs should be
self-reflective and diligent critics of their own
written communications. CPAs should urge them to
go beyond the advice of public relations “spin
doctors” and solicit critical comment from other
members of the top management team—especially the
CFO, internal and external auditors and a trusted
in-house contrarian. Critical review of CEO-speak
should be a formal protocol in internal audit
to start improving the language CEOs use is in the
educational system leading to certification as a
CPA. University business schools should be infused
with courses focusing on critical textual analysis
(especially of metaphor and rhetoric) to better
prepare graduates to understand the language of
accountability. They should make sure their
courses address how the words and language a CEO
uses affect, and are affected by, accounting. The
accounting profession also should consider making
changes to continuing professional education
programs to help current CPAs provide the highest
calibre advice about the language of accounting.
CPAs should not let management become so
concerned about the numbers that they ignore the
accompanying text. Words matter. CEO-speak
matters. And CPAs are in a position to help CEOs
do a better job of communicating financial
FCA, is a professor on the Rotman Faculty of
Management, University of Toronto, Canada.
FCPA, is a professor at the National Graduate
School of Management, Australian National
University, Canberra. They are the authors of
CEO-Speak: The Language of Corporate
Leadership. Their e-mail addresses are