Using Video to Disclose Forward-Looking Information: The Effect of Nonverbal Cues on Investors’ Judgments

47 Pages Posted: 30 Mar 2017 Last revised: 24 Nov 2019

See all articles by Nicole L. Cade

Nicole L. Cade

University of Pittsburgh - Accounting Group

Lisa Koonce

University of Texas

Kim I. Mendoza

University of Illinois at Urbana-Champaign - Department of Accountancy

Date Written: November 20, 2019

Abstract

In this paper, we conduct two experiments to examine how investors react to nonverbal cues of certainty as displayed by a CEO communicating forward-looking information via the relatively new and emerging medium of video. Results of the first experiment suggest that, at least for the setting we examine, investors react more negatively (do not react more positively) to a video disclosure when the CEO displays nonverbal cues of uncertainty (certainty) relative to the same disclosure delivered via audio or via written text. A second experiment reveals that the lack of a positive reaction to the certain CEO in the video may be due to investors’ belief that the CEO has incentives to convey certainty via nonverbal cues. Indeed, even a subsequent good-news realization—which should add credibility to the CEO’s certainty cues—does not change this perception. Our study has implications for firms considering video as a medium for disclosure.

Keywords: Nonverbal Cues, New Media, Video, Forward-Looking Disclosures

Suggested Citation

Cade, Nicole L. and Koonce, Lisa L. and Mendoza, Kim I., Using Video to Disclose Forward-Looking Information: The Effect of Nonverbal Cues on Investors’ Judgments (November 20, 2019). Available at SSRN: https://ssrn.com/abstract=2942245 or http://dx.doi.org/10.2139/ssrn.2942245

Nicole L. Cade

University of Pittsburgh - Accounting Group ( email )

United States

Lisa L. Koonce (Contact Author)

University of Texas ( email )

Dept. of Accounting
McCombs School of Business
Austin, TX 78712
United States
512-471-5576 (Phone)
512-471-3904 (Fax)

Kim I. Mendoza

University of Illinois at Urbana-Champaign - Department of Accountancy ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
350
Abstract Views
1,859
rank
94,477
PlumX Metrics