Do Investors Respond to CEO Facial Expressions of Anger During Television Interviews?

45 Pages Posted: 15 Dec 2020

See all articles by Rachel W. Flam

Rachel W. Flam

London Business School

Jeremiah Green

Texas A&M University - Department of Accounting

Nathan Y. Sharp

Texas A&M University - Department of Accounting

Date Written: November 2020

Abstract

Televised media interviews with public company CEOs occur nearly every trading day. During these interviews, investors observe visual cues in addition to hearing the verbal information managers disclose. Building on findings in the psychology and communications literature, we ask whether investors learn from CEO facial expressions. Using a sample of 959 interviews on CNBC from 2014-2018, we focus on CEO expressions of anger, an emotion generally associated with negative outcomes. We find that CEOs are more likely to show facial expressions of anger when the CEO is more expressive generally, when the journalist shows an angry facial expression, and when recent stock returns are lower. We also find that investors respond negatively to CEO facial expressions of anger and that CEO anger can nullify the benefits of a positive message from journalists.

Keywords: Facial Expressions, Anger, CEOs, Television Interviews, Machine Learning, CNBC

JEL Classification: M40, M41, M49, L82, G10, G14, M10, M12

Suggested Citation

Flam, Rachel W. and Green, Jeremiah and Sharp, Nathan Y., Do Investors Respond to CEO Facial Expressions of Anger During Television Interviews? (November 2020). Available at SSRN: https://ssrn.com/abstract=3740755 or http://dx.doi.org/10.2139/ssrn.3740755

Rachel W. Flam

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

Jeremiah Green

Texas A&M University - Department of Accounting ( email )

430 Wehner
College Station, TX 77843-4353
United States

Nathan Y. Sharp (Contact Author)

Texas A&M University - Department of Accounting ( email )

4353 TAMU
College Station, TX 77843-4353
United States
979-845-0338 (Phone)

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