Rapport-Building Effects of Linguistic Mirroring by Analysts: Evidence from Earnings Conference Calls

Abstract

Linguistic mirroring describes the imitation of the linguistic attributes of another person, including their words, phrases, and style. Prior literature finds that linguistic mirroring increases rapport with and the responsiveness of conversational partners. Using novel, question-specific measures of mirroring, we explore how analysts’ linguistic mirroring of managers during conference calls affects managerial responsiveness, as well as analysts’ future access to management and career outcomes. First, we find evidence that analysts engage in mirroring in the presence of career and information-gathering incentives. Second, we find that stylistic mirroring elicits lengthier, more conversational responses from managers, while lexical mirroring elicits more concise, analytical, and numeric responses. Third, consistent with the positive rapport- and reputation-building effects of mirroring, analysts engaging in more mirroring of any form issue more accurate firm-specific forecasts, are called upon earlier in subsequent conference calls, and are more likely to be named an All-Star in the following period. Finally, we find evidence consistent with mirroring conveying informational benefits to capital market participants. Our results suggest that linguistic mirroring is an important mechanism through which analysts can develop rapport with managers and enhance their reputation, benefiting themselves and the firm’s information environment.

Keywords: Linguistic mirroring, LSM, Jaccard, analysts, conference calls, rapport, information environment

JEL Classification: G14, G24, G41, M41