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Journal of Business Ethics

, Volume 113, Issue 2, pp 333–347 | Cite as

Exploring Top Management Language for Signals of Possible Deception: The Words of Satyam’s Chair Ramalinga Raju

  • Russell Craig
  • Tony Mortensen
  • Shefali Iyer
Article

Abstract

This paper explores the potential for systematic scrutiny of the language of top management to reveal signals of possible deceptive conduct. The language used in letters signed by Ramalinga Raju, Chair of the Indian multi-national company Satyam, are analysed using a multi-method quantitative approach. We explore the language in Raju’s annual report letters from 2002–2003 to 2007–2008; and in his letter of January 7, 2009 in which he confessed to deceptive conduct. We analyse the frequency of personal pronouns, the tone of positivity or negativity, the frequency of words of extreme emotion and aspects of the characteristics of language use indicated by the DICTION 5.0 text analysis master variable, CERTAINTY. The text of Raju’s letters appears to have been influenced by his self-confessed deceptive behaviour. Raju’s word choice changed noticeably in his five annual report letters prior to the collapse of Satyam as the scale and impact of his financial misstatements increased. The methods presented should be considered for adoption by auditors and regulators—as a way of assessing whether signals emerging from language use warrant closer (including audit) scrutiny of a firm’s financial reporting and governance. They should also be considered for use by monitors of entity risk, such as credit rating agencies and financial analysts.

Keywords

CEO Deception DICTION India Language Letters Linguistics Risk Tone 

Notes

Acknowledgments

The authors thank Joel Amernic, Naimh Brennan, Nick McKinney, Ravi Purohit, Wally Smieliauskas, Dennis Tourish and our colleagues at the University of Canterbury for their assistance and comments on earlier versions of this paper.

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Copyright information

© Springer Science+Business Media B.V. 2012

Authors and Affiliations

  1. 1.School of Accounting & FinanceVictoria UniversityMelbourneAustralia
  2. 2.College of Business and EconomicsUniversity of CanterburyChristchurchNew Zealand
  3. 3.DeloitteChristchurchNew Zealand

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