September 25, 2013

Demystifying the Language of CEOs

Originally published on Soundview

In our latest Executive Insights video, Soundview’s Senior Editor Andrew Clancy interviewed Laura (L.J.) Rittenhouse, President and CEO of Rittenhouse Rankings. She is also the author of Investing Between the Lines.

The key to the Rittenhouse ranking of companies is Candor. L.J. defines candor as illumination, to bring light into the dark places, and elevates this concept above that of transparency, which just shows what is apparent. Candor reveals what is really going on inside a company.

Rittenhouse’s research has demonstrated that companies that rank high in the candor of their communications also have the best performance in the stock market. One example L.J. provides is Warren Buffet and Berkshire Hathaway. Buffet always write his own annual report letter and spends much time crafting the letter so that it is clear and understandable. He also hosts a question & answer time with stockholders and speaks candidly with them about the state of the company and the economy.

L.J. makes the point that having candor depends on the corporate culture. If the CEO provides an example of candor, then this sets the tone for the culture of the company. She states that “our company’s culture influences us and we help shape the culture by our words and actions.”

If you would like to hear the full interview with L.J. Rittenhouse, along with our full series of Executive Insights videos, these are available as part of our Premium Subscription.