How to Talk Down Your Stock Performance

41 Pages Posted: 8 Mar 2019 Last revised: 19 Jan 2021

See all articles by Andreas Barth

Andreas Barth

Goethe University Frankfurt - Department of Finance; Halle Institute for Economic Research; Saarland University

Sasan Mansouri

University of Groningen - Faculty of Economics and Business; Goethe University Frankfurt; Halle Institute for Economic Research

Fabian Woebbeking

Halle Institute for Economic Research; Martin Luther University of Halle-Wittenberg

Severin Zörgiebel

Goethe University Frankfurt

Date Written: April 19, 2020

Abstract

We process the natural language of verbal firm disclosures in order to study the use of context specific language or jargon and its impact on financial performance. We observe that, within the Q&A of earnings conference calls, managers use less jargon in responses to tougher questions, and after a quarter of bad economic success. Moreover, markets interpret the lack of precise information as a bad signal: we find lower cumulative abnormal returns and a higher implied volatility following earnings calls where managers use less jargon. These results support the argument that context specific language or jargon helps to efficiently and precisely transfer information.

Keywords: financial jargon, natural language processing, textual analysis, stock returns, implied volatility, information exchange, corporate disclosure, conference calls

JEL Classification: D82, G12, G14, G30

Suggested Citation

Barth, Andreas and Mansouri, Sasan and Woebbeking, Fabian and Zörgiebel, Severin, How to Talk Down Your Stock Performance (April 19, 2020). Available at SSRN: https://ssrn.com/abstract=3336671 or http://dx.doi.org/10.2139/ssrn.3336671

Andreas Barth

Goethe University Frankfurt - Department of Finance ( email )

Theodor-W.-Adorno-Platz 3
Frankfurt, 60629
Germany

Halle Institute for Economic Research ( email )

P.O. Box 11 03 61
Kleine Maerkerstrasse 8
D-06017 Halle, 06108
Germany

Saarland University ( email )

Stadtwald
Saarbrucken, Saarland D-66123
Germany

Sasan Mansouri

University of Groningen - Faculty of Economics and Business ( email )

Postbus 72
9700 AB Groningen
Netherlands

Goethe University Frankfurt ( email )

Frankfurt am Main
Germany
015781284258 (Phone)

HOME PAGE: http://www.sasanm.de

Halle Institute for Economic Research

P.O. Box 11 03 61
Kleine Maerkerstrasse 8
D-06017 Halle, 06108
Germany

Fabian Woebbeking (Contact Author)

Halle Institute for Economic Research ( email )

P.O. Box 11 03 61
Kleine Maerkerstrasse 8
D-06017 Halle, 06108
Germany
+49 345 7753-851 (Phone)

HOME PAGE: http://https://www.iwh-halle.de/

Martin Luther University of Halle-Wittenberg

Emil-Abderhalden-Str. 7
Halle an der Saale
06099 Halle (Saale), DE Sachsen-Anhalt 06099
Germany

Severin Zörgiebel

Goethe University Frankfurt ( email )

Theodor-W.-Adorno-Platz 3
Frankfurt am Main, 60323
Germany

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