Managers' Vocal Delivery and Real-Time Market Reactions in Earnings Calls

48 Pages Posted: 27 Mar 2023 Last revised: 13 Nov 2023

See all articles by Bok Baik

Bok Baik

Seoul National University

Alex Kim

University of Chicago Booth School of Business

David Sunghyo Kim

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Sangwon Yoon

Seoul National University

Date Written: November 1, 2023

Abstract

Corporate disclosures increasingly utilize multimedia to assist investors in better comprehending information. This study investigates how nonverbal disclosures, specifically the quality of vocal delivery, influence real-time investment decisions. We measure the quality of vocal delivery using a deep learning algorithm that analyzes the pronunciation, fluency, and diction of speakers to capture how easily audio information can be comprehended by listeners. Using a large sample of earnings conference call audio files, we show that real-time stock market reactions are subdued when vocal delivery is of low-quality and that this effect is salient in retail trades. We also find that vocal delivery is of lower quality when firms report a decrease in earnings, have high earnings volatility, present a negative-sentiment transcript, and have less persistent positive earnings. Lastly, we show that vocal delivery quality is associated with subsequent analyst activities and media sentiment. Our research provides evidence that nonverbal disclosure is associated with information processing costs for market participants, which could motivate managers to adjust their nonverbal disclosures.

Keywords: Earnings Conference Call, Vocal Delivery, Information Processing Cost, Real-Time Market Reactions

JEL Classification: G14, G41, M41

Suggested Citation

Baik, Bok and Kim, Alex G. and Kim, David and Yoon, Sangwon, Managers' Vocal Delivery and Real-Time Market Reactions in Earnings Calls (November 1, 2023). Chicago Booth Research Paper No. 23-21, Fama-Miller Working Paper, Available at SSRN: https://ssrn.com/abstract=4398495 or http://dx.doi.org/10.2139/ssrn.4398495

Bok Baik

Seoul National University ( email )

Seoul
Kwanak-gu
Seoul, 151-742
Korea, Republic of (South Korea)

Alex G. Kim (Contact Author)

University of Chicago Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

David Kim

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

Sangwon Yoon

Seoul National University ( email )

Kwanak-gu
Seoul, 151-742
Korea, Republic of (South Korea)

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