It's Not What You Say, But How You Say it – Managerial Charisma and Agitation in Earnings Conference Calls

56 Pages Posted: 16 May 2022

See all articles by Wolfgang Breuer

Wolfgang Breuer

RWTH Aachen University

Andreas Knetsch

RWTH Aachen University

Sami uddin

RWTH Aachen Department of Finance

Date Written: November 15, 2021

Abstract

Using a machine learning-based software, we identify two patterns of managerial communication in the question-and-answer (Q&A) part of conference calls: Charismatic communication represents an effort of managers to convey a positive picture of the firm’s situation. Agitated communication is a result of managers being stressed or tense. Our empirical evidence shows that market participants react favorably to charismatic rhetoric, even though it does not convey any useful information on the firm’s economic information. In fact, charismatic communication prompts stronger stock market reactions than the actual content of the Q&A part. Moreover, we demonstrate that managers are more agitated when they present earnings figures that are more inflated by means of discretionary accruals.

Keywords: Textual Analysis, Managerial Rhetoric, Managerial Affective States, Stock Market Reactions, Earnings Management

Suggested Citation

Breuer, Wolfgang and Knetsch, Andreas and uddin, Sami, It's Not What You Say, But How You Say it – Managerial Charisma and Agitation in Earnings Conference Calls (November 15, 2021). Available at SSRN: https://ssrn.com/abstract=4098568 or http://dx.doi.org/10.2139/ssrn.4098568

Wolfgang Breuer

RWTH Aachen University ( email )

Templergraben 55
D-52056 Aachen, 52056
Germany

Andreas Knetsch (Contact Author)

RWTH Aachen University ( email )

Templergraben 55
52056 Aachen, 52056
Germany

Sami Uddin

RWTH Aachen Department of Finance ( email )

Templergraben 64
Aachen, 52056
Germany

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