How the Use of Temporal Immediacy and Video Conference Calls Jointly Impact Investors’ Willingness to Invest

Abstract

CEOs can alter the temporal immediacy of their language in describing firm performance. For example, using temporally immediate language to describe good news makes it seem more immediate, and using temporally nonimmediate language to describe bad news makes it seem more distant. In two experiments, we examine whether a CEO’s effective use of temporal immediacy impacts investors’ willingness to invest. Furthermore, as audio/video communication of conference calls has become more popular, our study also investigates this linguistic effect in text, audio, and video formats. We predict and find that investors are more likely to increase investment willingness when managers effectively use temporal immediacy to describe positive news and temporal non-immediacy to describe negative news than when they do not. However, such an effect only exists with text but not audio or video communication. Our findings have important implications for investors, managers, and regulators.

Keywords: Temporal Immediacy, Communication Mode, Language, Nonverbal Behavior, Construal Level Theory

JEL Classification: D15, D81, D83, D91, G41, M41