Do Investors Infer Vocal Cues from CEOS During Quarterly REIT Conference Calls?

Abstract

We examine the investor reaction to emotionally charged information. Using the audio files of quarterly earnings conference calls and specialized Layered Voice Analysis software, we isolate the emotional content of managers' vocal cues. With results that are both statistically and economically significant, we find that executive emotion is positively related to investors' initial reaction. Moreover, this strong investor reaction to emotional signals by REIT managers appears to be justified, suggesting that credible, value-relevant information is contained in the emotion related signals. However, we also find some limited evidence of a partial reversal in subsequent trading windows, suggesting that investors may second guess themselves or fear they overreacted.

Keywords: REITs; Conference calls; Disclosure; Stock returns; Vocal cues; Layered voice

JEL Classification: D80; G10; G12; G14