" Investors should be aware that there are human factors at play when they are listening to reports on firm performance, Zhang added."
Toronto, Dec 12 - Companies perform better if their senior management is seen as being optimistic while disclosing earnings, says a new research.

A CEO's natural sunny disposition can have an impact on the way the market reacts to announcements of the company's earnings, according to researchers from the University of British Columbia's Sauder School of Business.

The study shows that leaders' inclinations to express themselves with optimism carries over into their tone when disclosing company performance - a tendency that can create an upswing in stock price.

Looking at how managers naturally convey themselves, we tracked the way CEOs and CFOs communicate earnings across their leadership roles at multiple firms to decipher their overall communication style, said Jenny Zhang, assistant professor who co-authored the paper.

Zhang and her colleagues examined transcripts of earnings reports delivered by managers in conference calls.

They tabulated the frequency of positive and negative words used and contrasted the information with corporate performance and resulting market activity.

The findings revealed that managers whose language displayed an optimistic state of mind are more likely to have a positive influence on their firm's position in the market.

Investors should be aware that there are human factors at play when they are listening to reports on firm performance, Zhang added.

The study is forthcoming in the journal Review of Accounting Studies.


comments powered by Disqus
Read more on:
 
PERMALINK

http://www.nerve.in/news:2535002427614
You can quote the permanent link above for a direct link to the story. We do not archive or expire our news stories.

STORY OPTIONS
  Email this story to a friend
  XML feed for Americas
 
COPYRIGHTS INFORMATION
All rights reserved for news content. Reproduction, storage or redistribution of Nerve content and articles in any medium is strictly prohibited.
Contact Nerve Staff for any feedback, corrections and omissions in news stories.
 

All rights reserved for the news content. Reproduction, storage or redistribution of Nerve content and articles in any medium is strictly prohibited.