Making investors feel good during earnings conference calls: The effect of warm-glow rhetoric

2019 ◽  
Vol 44 (2) ◽  
pp. 63-72
Author(s):  
Vivien E Jancenelle ◽  
Susan F Storrud-Barnes ◽  
Anthony Iaquinto
Keyword(s):  
Abnormal Returns ◽  
Theory And Practice ◽  
Computer Assisted ◽  
Warm Glow ◽  
Conference Calls ◽  
Quarterly Earnings ◽  
Top Managers ◽  
Earnings Surprises ◽  
Study Methodology ◽  
Earnings Uncertainty

In recent years, earnings conference calls have become a popular disclosure tool through which top managers can provide more information to the market regarding the quarterly earnings of their firms. Although some research has indicated that the tone of earnings conference calls is crucial in mitigating investors’ negative reactions to earnings surprises, relatively little is still known about other rhetorical tactics that may be available for managers to create value during times of heightened earnings uncertainty. This article contends that warm-glow rhetoric may be another way to mitigate investors’ negative reactions to earnings surprises, as warm-glow theory suggests that individuals are willing to make suboptimal economic choices when they receive warm-glow payouts. Hypotheses drawing on warm-glow theory and the incremental useful information perspective are developed and tested using computer-assisted text analysis (CATA) and event study methodology on a longitudinal sample of 1920 calls, and it is suggested that warm-glow rhetoric positively moderates the relationship between earnings surprises and financial performance (as measured through cumulated abnormal returns). The findings illustrate how the warm-glow effect can be used as an unconventional, yet effective tactic with which managers can create market value. A discussion of the findings and their implications for theory and practice concludes the study.

Moral foundations and financial performance: the effect of moral cues during times of earnings uncertainty

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Vivien E. Jancenelle
Keyword(s):  
Firm Value ◽  
Market Performance ◽  
Computer Assisted ◽  
Moral Foundations ◽  
Conference Calls ◽  
Data Set ◽  
Content Type ◽  
The Face ◽  
Study Methodology ◽  
Earnings Uncertainty

Purpose This paper aims to investigate whether cues of morality can mitigate stock sell-offs in the face of earnings uncertainty prior to earnings conference calls and draws on moral foundations theory to study the effect of universal moral cues (harm/care and fairness/reciprocity rhetoric) and primarily conservative moral cues (ingroup/loyalty, authority/respect and purity/sanctity rhetoric) on market performance. Design/methodology/approach The study relies on a longitudinal data set of 1,920 firm-quarter observations corresponding to calls held by firms listed on the S&P 500 in 2015 and relies on computer-assisted-text-analysis and event-study methodology to test hypotheses. Findings The results suggest that cues of universal moral foundations have a mitigating effect on stock sell-offs and are able to create firm value; while cues primarily conservative moral foundations are not found to have an effect on market performance. Originality/value This investigation highlights why earnings conference calls may serve as a valuable tool for communicating a firm’s moral inclination and why universal morality may appeal to a wider range of shareholders than primarily conservative morality.

Organizational Psychological Capital During Earnings Conference Calls: Mitigating Shareholders’ Sell-Off in the Face of Earnings Surprises?

2018 ◽  
Vol 25 (4) ◽  
pp. 469-480 ◽  
Author(s):  
Vivien E. Jancenelle
Keyword(s):  
Psychological Capital ◽  
Firm Strategy ◽  
Organizational Level ◽  
Computer Assisted ◽  
Conference Calls ◽  
Data Set ◽  
Earnings Surprise ◽  
Upper Echelons Theory ◽  
Top Managers ◽  
Earnings Surprises

Publicly traded firms release their earnings figures quarterly, and subsequently hold earnings conference calls where top managers can comment on firm strategy. Markets are particularly sensitive to earnings surprises, and conference calls are becoming an increasingly useful tool capable of mitigating shareholders’ negative reactions to surprises on earnings. This article argues that top managers who cue organizational-level positive psychological capital (PsyCap) are likely to mitigate investors’ reactions unanticipated changes in earnings. The developed hypotheses draw on arguments from the incremental useful information perspective, upper echelons theory, and the PsyCap literature. The analysis relies on a longitudinal data set composed of 1,920 observations including calls held for firms listed on the S&P 500 for all quarters of 2015. Computer-assisted text analysis is used to assess cues of organizational PsyCap included within each call, and event-study methodology is used to assess market performance. The findings suggest that organizational PsyCap mitigates stockholders’ negative reaction to earnings surprise, thereby indicating that psychological capital is well-perceived by investors and adds back market value for firms. A discussion of the findings and their implications for research and practice concludes the study.

scholarly journals Does earnings surprise determine the timing of the earnings announcement? Evidence from earnings announcements of Indian companies

2020 ◽  
Vol 5 (1) ◽  
pp. 119-134
Author(s):  
Krishna Prasad ◽  
Nandan Prabhu
Keyword(s):  
Earnings Announcements ◽  
Earnings Announcement ◽  
Content Type ◽  
Quarterly Earnings ◽  
Earnings Surprise ◽  
Market Responses ◽  
Earnings Surprises ◽  
Study Methodology ◽  
The Difference ◽  
Reported Earnings

PurposeThe purpose of this study is to investigate whether the earnings surprise influences decision to make earnings announcements during or after the trading hours is influenced by the earnings surprise resulting from the difference between consensus earnings estimates and the actual reported earnings.Design/methodology/approachEvent study methodology was employed to test the hypotheses relating to earnings surprise and timing of earnings announcements. Twelve quarterly earnings announcements of 30 companies, drawn from BSE SENSEX of India, were studied to test the hypothesized relationships.FindingsThe study has found statistically significant differences in the market responses to the earnings announcements made during and after the trading hours. The market demonstrated a negative response to the earnings announcements made after the trading hours. Further, the results of the logistic regression have shown that the presence of significant earnings surprises is likely to induce firms to make earnings announcements after the trading hours. The results indicate that those firms that intend to reduce the overreaction and underreaction to earnings surprises are likely to make earnings announcements after the trading hours.Originality/valueThis paper highlights the market response to the earnings announcement made during and after the regular trading hour. Further, the paper examines if the earnings surprise influences the decision to announce the results.

scholarly journals Casting Conference Calls

2020 ◽  
Vol 66 (11) ◽  
pp. 5015-5039 ◽  
Author(s):  
Lauren Cohen ◽  
Dong Lou ◽  
Christopher J. Malloy
Keyword(s):  
Firm Behavior ◽  
Abnormal Returns ◽  
Discretionary Accruals ◽  
Conference Calls ◽  
Earnings Expectations ◽  
Earnings Restatements ◽  
Future Earnings ◽  
Control Information ◽  
The United Kingdom ◽  
Earnings Surprises

We explore a subtle but important mechanism through which firms can control information flow to the markets. We find that firms that “cast” their conference calls by disproportionately calling on bullish analysts tend to underperform in the future. Firms that call on more favorable analysts experience more negative future earnings surprises and more future earnings restatements. A long–short portfolio that exploits this differential firm behavior earns abnormal returns of up to 149 basis points per month or almost 18% per year. We find similar evidence in an international sample of earnings call transcripts from the United Kingdom, Canada, France, and Japan. Firms with higher discretionary accruals, firms that barely meet/exceed earnings expectations, and firms (and their executives) that are about to issue equity, sell shares, and exercise options are all significantly more likely to cast their earnings calls. This paper was accepted by Tyler Shumway, finance.

Seasonal Analysis of Abnormal Returns after Quarterly Earnings Announcements

2014 ◽  
Vol 1 (1) ◽  
pp. 501
Author(s):  
Dr. Iqbal
Keyword(s):  
Stock Market ◽  
Abnormal Returns ◽  
Strong Form ◽  
Bad News ◽  
Good News ◽  
Quarterly Earnings ◽  
Study Methodology ◽  
Seasonal Analysis ◽  
Indian Stock Market ◽  
Event Study Methodology

This study examines whether the Indian stock market is efficient in semi-strong form and seasonality exists. For this purpose, we take the first and fourth quarters’ results of companies for the years 2008 to 2011. We divide companies into good news and bad news portfolios on the basis of percentage changes in net profits and net sales. We use event study methodology. The results reveal that average abnormal returns occur randomly and cumulative average abnormal returns are significant for both portfolios. Fourth quarter results give better positive signals to the market than first quarter results. We conclude that seasonality exists in the Indian stock market and it is also semi-strong form inefficient and investors can use this opportunity to buy and earn abnormal profit. 

Transformation of management culture in context of supply chain digitalization

2021 ◽  
pp. 1-12
Author(s):  
Marina Kolmykova ◽  
Marija Troyanskaya ◽  
Galiya Aralbaeva ◽  
Nadezhda Seliverstova ◽  
Nadezhda Chetverikova
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Theory And Practice ◽  
Digital Culture ◽  
Management Culture ◽  
Subjective Beliefs ◽  
Culture Transformation ◽  
Top Managers ◽  
Potential Factor ◽  
Policies And Programs

BACKGROUND: Digitalization has transformed the modes of work, communication and collaboration in the workplace, which is a challenge for all organizations, requiring the adaptation of structures, strategies, leadership and management culture. In the study, it is proposed to consider management culture as a potential factor that determines the competitive management of the network structure of supply chains. Despite numerous studies dedicated to supply chains digitalization, there’s lack of researches dedicated to deep investigation of management culture transformation in context of the digitalization of supply chains requires. OBJECTIVE: The purpose of the study is to identify the determinants contributing to the transformation of management culture in context of supply chain digitalization. METHODS: The study is conceptual research that links management culture and the supply chain. Based on the evolutionary dynamism of the theory and practice of management culture, two aspects of culture have been identified: national psychology (subjective beliefs) and company potential (values and behaviour of personnel). RESULTS: It is assumed that the most effective culture in context of supply chain digitalization is digital culture as it is focused on the external environment. It has been found that the key determinants of the change are the values and behaviour of the personnel, and as a result, they create an effective approach to the management culture transformation. CONCLUSIONS: The results of the study allow managers to assess the established organizational culture that facilitates or hinders the activities of the business in order to successfully implement and achieve the goals set. The results of this study can be applied by top managers of companies facing digitalization of supply chains in developing HR and managerial policies and programs.

News production theory and practice

Pragmatics ◽  
2008 ◽  
Vol 18 (1) ◽  
pp. 59-85 ◽  
Author(s):  
Tom Van Hout ◽  
Geert Jacobs
Keyword(s):  
Process Analysis ◽  
Theory And Practice ◽  
Computer Assisted ◽  
Press Releases ◽  
News Production ◽  
News Reports ◽  
Business News ◽  
Writing Practices ◽  
The Individual ◽  
And Control

This paper considers notions of agency, interaction and power in business news journalism. In the first part, we present a bird’s eye view of news access theory as it is reflected in selected sociological and anthropological literature on the ethnography of news production. Next, we show how these theoretical notions can be applied to the study of press releases and particularly to the linguistic pragmatic analysis of the specific social and textual practices that surround their transformation into news reports. Drawing on selected fieldwork data collected at the business desk of a major Flemish quality newspaper, we present an innovative methodology combining newsroom ethnography and computer-assisted writing process analysis which documents how a reporter discovers a story, introduces it into the newsroom, writes and reflects on it. In doing so, we put the individual journalist’s writing practices center stage, zoom in on the specific ways in which he interacts with sources and conceptualize power in terms of his dependence on press releases. Following Beeman & Peterson (2001), we argue in favor of a view of journalism as ‘interpretive practice’ and of news production as a process of entextualization involving multiple actors who struggle over authority, ownership and control.

Market reactions to the inclusion of people with disabilities

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Claudia Araceli Hernández González
Keyword(s):  
Event Study ◽  
Stock Prices ◽  
Stock Price ◽  
Abnormal Returns ◽  
People With Disabilities ◽  
Market Reactions ◽  
Content Type ◽  
Study Methodology ◽  
Research Advance ◽  
The Impact

PurposeThis study aims to provide evidence of market reactions to organizations' inclusion of people with disabilities. Cases from financial journals in 1989–2014 were used to analyze the impact of actions taken by organizations to include or discriminate people with disabilities in terms of the companies' stock prices.Design/methodology/approachThis research is conducted as an event study where the disclosure of information on an organization's actions toward people with disabilities is expected to impact the organization's stock price. The window of the event was set as (−1, +1) days. Stock prices were analyzed to detect abnormal returns during this period.FindingsResults support the hypotheses that investors value inclusion and reject discrimination. Furthermore, the impact of negative actions is immediate, whereas the impact of positive actions requires at least an additional day to influence the firm's stock price. Some differences among the categories were found; for instance, employment and customer events were significantly more important to a firm's stock price than philanthropic actions. It was observed that philanthropic events produce negative abnormal returns on average.Originality/valueThe event study methodology provides a different perspective to practices in organizations regarding people with disabilities. Moreover, the findings in this research advance the literature by highlighting that organizations should consider policies and practices that include people with disabilities.

New product announcement: spokesperson a manifestation of increasing firm value

2018 ◽  
Vol 13 (6) ◽  
pp. 1635-1655
Author(s):  
Bikram Jit Singh Mann ◽  
Sonia Babbar
Keyword(s):  
Event Study ◽  
Firm Value ◽  
Source Credibility ◽  
Shareholder Value ◽  
Abnormal Returns ◽  
New Product ◽  
Content Type ◽  
Study Methodology ◽  
The Impact

Purpose Before introducing new products, companies make announcements regarding the launch of the product which influences stock market yields of the announcing companies. Information content of the new product announcement has never been an exclusive focused stream of research. Therefore, an assessment of the impact of the content characteristics of the new product announcement on the shareholder value and the impact of source credibility (spokesperson) in making such announcements is a major gap in the existing literature. The paper aims to discuss these issues. Design/methodology/approach First, the standard event study methodology has been employed on the sample to measure the abnormal gains/losses accruing to the announcing firms. Second, moderated regression analysis (MRA) is employed to identify the characteristics of the new product announcement and to check the role of the spokesperson in creating shareholder value. Findings The results of the event study indicate that the abnormal returns are generated during the new product announcement. The results of MRA disclose the variables having a positive and a significant influence on the effective returns of the announcing companies. Likewise, the role of the spokesperson has come out brightly as a credible communicator. Originality/value The research provides a direction to the announcing companies regarding the content of the announcement leading to a positive perception among the investing community. Likewise, it also provides direction to the investor community about the characteristics of the announcement content they give weight age in forming a perception of strength in evaluating the new product announcement, to which they are largely unaware.

scholarly journals Impacto dos Ratings de crédito nas ações de empresas de capital aberto no Brasil

2017 ◽  
Vol 16 (2) ◽  
pp. 573-602
Author(s):  
Rafaela Augusta Cunha Silveira ◽  
Renata Turola Takamatsu ◽  
Bruna Camargos Avelino
Keyword(s):  
Stock Prices ◽  
Credit Rating ◽  
Stock Exchange ◽  
Abnormal Returns ◽  
Final Analysis ◽  
Share Prices ◽  
New Information ◽  
Agency Issues ◽  
Study Methodology ◽  
The Impact

Resumo O rating de crédito expressa uma opinião, por intermédio de escalas, sobre a qualidade do crédito de empresas, utilizado-a como medida de avaliação de risco no mercado. Agências de classificação de risco de crédito, como a Moody’s, divulgam os ratings que atribuem às empresas. Primeiramente, essas agências emitem o new rating, que representa o primeiro rating da companhia, e, posteriormente, essa emissão pode apresentar variações, denominadas upgrades e downgrades, relativas a boas e más notícias, respectivamente. Além disso, os ratings podem ser colocados em uma Watchlist quando, em breve, pode haver uma mudança do rating para downgrade ou para upgrade. O objetivo com este estudo consistiu, diante do que foi tratado, em abordar o impacto do rating de crédito sobre os preços das ações de empresas listadas na bolsa de valores brasileira. Para alcançar o objetivo proposto, foi analisada uma amostra de 44 empresas comercializadas na BM&FBovespa e 65 ratings nacionais de longo prazo emitidos pela Moody’s entre 2000 e 2015. Utilizou-se a metodologia de estudo de eventos, com os retornos normais calculados pelo modelo de retornos ajustados ao risco e ao mercado, e o Teste-F e o Teste-T para verificar a significância dos resultados. As análises finais evidenciaram que os preços das ações não são afetados de forma significativa pelas divulgações dos new ratings, downgrades, upgrades, on watch – possible downgrades e on watch – possible upgrades em nenhuma janela do evento, indicando que os ratings, para a amostra analisada, não trazem novas informações ao mercado.Palavras-chave: Ações. Rating. Estudo de eventos. Retornos anormais. Abstract Credit ratings are used as a mean to investors get new information on the companies by reducing the information asymmetry in the market. Thus, the rating is an important mean of business information with investors, enabling share prices relating to companies react to it. Branches of credit rating as Moody's, disclose the ratings they assign to companies. First, the agency issues the new rating, which represents the company's first rating, then this issue may vary, upgrades and downgrades calls relating to good and bad news respectively. In addition, the ratings could be placed in a Watchlist when, soon there may be a change to the rating downgrade or upgrade. The purpose of this study was to discuss the impact that the credit rating has on stock prices of companies listed on the Brazilian stock exchange. For a sample of 44 companies traded on BM&FBovespa and 65 long-term national ratings issued by Moody's between 2000 and 2015, we used the event study methodology, with normal returns calculated by the model of returns adjusted for risk and market the F-Test and T-Test to test the significance of the results. The final analysis showed that stock prices are not significantly affected by the disclosures of new ratings, downgrades, upgrades, on watch – possible downgrades and on watch – possible upgrades in any event window, indicating that the ratings do not bring new information to the market.Keywords: Stocks. Rating. Event studies. Abnormal returns.

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