Are Managers ‘Under-the-Weather’ During Earnings Conference Calls?

42 Pages Posted: 30 Jul 2018 Last revised: 18 Nov 2022

See all articles by Bill B. Francis

Bill B. Francis

Rensselaer Polytechnic Institute (RPI) - Lally School of Management

Wenyao Hu

Saint Mary's University; Rensselaer Polytechnic Institute (RPI) - Department of Finance and Accounting

Thomas Shohfi

U.S. Securities and Exchange Commission

Roger M. White

Arizona State University (ASU) - School of Accountancy

Date Written: November 16, 2022

Abstract

Earnings conference calls represent an important communication channel for investors to observe managerial behavior. We examine the impact of executive mood using seasonally-adjusted weather conditions at corporate headquarters during these calls. Using 66,724 earnings calls from 2006 to 2017, we find that managers speak more negatively and with less (more) quantitative information (uncertainty) when local weather conditions are poor. Managers also exhibit more (less) extreme negative (moderate) language and executive mood persistently influences returns after earnings calls. Our results remain significant after adding controls for investor mood, separating firms from big and small states, mediation tests, firm and executive fixed effects, and propensity score matching. Our findings suggest exogenous effects of weather significantly impact managerial mood and how management communicates in unprepared corporate disclosures, which influences firm value in a manner not fully captured by fundamental financial accounting information.

Keywords: Cloud Cover, Conference Calls, Disclosure, Earnings Calls, Executive Behavior, Management Behavior, Mood, Weather, Weather-Induced Behavior

JEL Classification: D22, G14, G41, M41

Suggested Citation

Francis, Bill B. and Hu, Wenyao and Hu, Wenyao and Shohfi, Thomas and White, Roger M., Are Managers ‘Under-the-Weather’ During Earnings Conference Calls? (November 16, 2022). Available at SSRN: https://ssrn.com/abstract=3222338 or http://dx.doi.org/10.2139/ssrn.3222338

Bill B. Francis

Rensselaer Polytechnic Institute (RPI) - Lally School of Management ( email )

Troy, NY 12180
United States

Wenyao Hu

Saint Mary's University ( email )

923 Robie Street
Halifax, Nova Scotia B3H 3C3
Canada

HOME PAGE: http://wenyaohu.com

Rensselaer Polytechnic Institute (RPI) - Department of Finance and Accounting ( email )

Pittsburg Building 2000
110, 8th street
Troy, NY 12180
United States

Thomas Shohfi (Contact Author)

U.S. Securities and Exchange Commission ( email )

Washington, DC
United States

HOME PAGE: http://shohfi.com/

Roger M. White

Arizona State University (ASU) - School of Accountancy ( email )

Tempe, AZ 85287
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
666
Abstract Views
2,476
rank
58,697
PlumX Metrics