The Annual General Meeting Revisited: The Role of the CEO Speech

Abstract

We analyze the informational value of the Annual General Meeting (AGM) for investors’ decision-making. As the AGM is typically preceded by several information disclosures, previous research has shown it to trigger only a marginal market reaction. We consider the AGM, and particularly the tone of the CEO’s speech at the AGM, as a hitherto overlooked feature and compile a unique comprehensive dataset of 457 German AGMs between 2008 and 2016. We show that the sentiment of the CEO speech as well as other components of the AGM are significantly related to subsequent return reactions and future firm profitability.

Keywords: Annual general meeting, market efficiency, CEO speeches, textual sentiment

JEL Classification: G02, G12, G14