To read or to listen? Does disclosure delivery mode impact investors’ reactions to managers’ tone language?

Posted: 5 Oct 2023

See all articles by W. Brooke Elliott

W. Brooke Elliott

University of Illinois at Urbana-Champaign

Serena Loftus

Kent State University - Department of Accounting

Amanda Winn

University of Kansas

Date Written: August 4, 2023

Abstract

We examine how disclosure delivery mode—oral versus written—influences investors’ reactions to managers’ tone language. We hypothesize that listening to disclosures, relative to reading them, causes managers’ qualitative word choices to have a greater impact on investors’ judgments. We theorize that this effect occurs because oral delivery mode promotes heuristic processing and qualitative tone language is an easy-to-process disclosure element. The results from an experiment in a conference call setting are consistent with our hypothesis and suggest a boundary condition. Specifically, the interaction of mode and tone language is significant in a setting where heuristic processing is likely (good earnings news) but not in a setting where investors are likely to scrutinize the disclosure (bad earnings news). Our results inform investors about the potential consequences of how they consume disclosures. Specifically, we show that investors are more susceptible to managers’ tone language when listening to disclosures containing good news than when reading them.

Keywords: disclosures, delivery mode, tone language, investment decisions, conference calls

Suggested Citation

Elliott, W. Brooke and Loftus, Serena and Winn, Amanda, To read or to listen? Does disclosure delivery mode impact investors’ reactions to managers’ tone language? (August 4, 2023). Contemporary Accounting Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=4547611

W. Brooke Elliott

University of Illinois at Urbana-Champaign ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

Serena Loftus (Contact Author)

Kent State University - Department of Accounting ( email )

P.O. Box 5190
Kent, OH 44242-0001
United States

HOME PAGE: http://https://www.kent.edu/business/profile/serena-loftus-phd

Amanda Winn

University of Kansas

1415
Lawrence, KS 66045
United States

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