How to Talk Down Your Stock Performance

41 Pages Posted: 8 Mar 2019 Last revised: 19 Jan 2021

See all articles by Andreas Barth

Andreas Barth

Goethe University Frankfurt - Department of Finance

Sasan Mansouri

Goethe University Frankfurt - Department of Finance

Fabian Woebbeking

Goethe University Frankfurt - Department of Finance

Severin Zörgiebel

Goethe University Frankfurt

Date Written: April 19, 2020

Abstract

We process the natural language of verbal firm disclosures in order to study the use of context specific language or jargon and its impact on financial performance. We observe that, within the Q&A of earnings conference calls, managers use less jargon in responses to tougher questions, and after a quarter of bad economic success. Moreover, markets interpret the lack of precise information as a bad signal: we find lower cumulative abnormal returns and a higher implied volatility following earnings calls where managers use less jargon. These results support the argument that context specific language or jargon helps to efficiently and precisely transfer information.

Keywords: financial jargon, natural language processing, textual analysis, stock returns, implied volatility, information exchange, corporate disclosure, conference calls

JEL Classification: D82, G12, G14, G30

Suggested Citation

Barth, Andreas and Mansouri, Sasan and Woebbeking, Fabian and Zörgiebel, Severin, How to Talk Down Your Stock Performance (April 19, 2020). Available at SSRN: https://ssrn.com/abstract=3336671 or http://dx.doi.org/10.2139/ssrn.3336671

Andreas Barth

Goethe University Frankfurt - Department of Finance ( email )

Theodor-W.-Adorno-Platz 3
Frankfurt, 60629
Germany

Sasan Mansouri

Goethe University Frankfurt - Department of Finance ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany
+49(0)6979833727 (Phone)

HOME PAGE: http://www.sasanm.de

Fabian Woebbeking (Contact Author)

Goethe University Frankfurt - Department of Finance ( email )

Theodor-W.-Adorno-Platz 3
Frankfurt, 60323
Germany
+49 (69) 798 33731 (Phone)

Severin Zörgiebel

Goethe University Frankfurt ( email )

Theodor-W.-Adorno-Platz 3
Frankfurt am Main, 60323
Germany

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