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

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: 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