Document Type

Thesis or dissertation

Date of this Version



Maurice Schweitzer, Polly Kang


The thesis revolves around the language used by executives on earnings calls to respond to analysts’ questions on business performance and strategy. Every fiscal quarter, most publicly traded companies report financial performance over an audio call to analysts. The equity analysts, in turn, factor in the information conveyed over the call into their fundamental analysis of the company’s stock price, which drives their buy, sell, or hold recommendation. Earning calls consist of two components, the presentation as well as the questions and answers section. The CEO and CFO typically read financial information such as sales numbers modeled after the companies’ 10-K and 10-Q. In the Q&A section, analysts ask questions about specific financial indicators or the firm’s overarching business strategy to which company management can respond. Given that executives cannot predict analysts’ questions with complete certainty, executives’ responses tend to be more unscripted than in the presentation section. Executives often have coaches who provide instruction on how to best respond to questions on challenging situations such as declining profit or impending litigation. Following the completion of the earnings call, the stock price can drastically change if significant news or major guidance revision is disclosed. Written transcripts of earnings calls are typically collected and read post-hoc by investors researching the fundamentals of the company. More and more investment professionals are seeking more information from parsing the tone and syntax of executives’ language on the calls, a field of decision-making literature that this paper seeks to contribute to. The objective of this paper is two-fold: first, understanding how executives currently frame their responses to questions about good and bad events in terms of self-centered and collective attribution. Second, the paper determines the best rhetorical strategy of the two aforementioned options for executives to use to manage the impressions of analysts and clearly communicate business performance. As such, the paper compares and contrasts the language pattern and reveals what pattern garners the most favorable response and perception from investors and the broader audience. The paper finds that in both downturns and strong quarters, analysts and hence the market responds favorably to self-referential, individualist pronoun usage (“I”, “mine”) as opposed to self-referential, collectivist pronouns (“we”, “our”). Other syntactical dimensions such as internal and external attribution are examined as secondary characteristics of executives’ speech, providing additional avenues for further research.



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Business Commons



Date Posted: 04 December 2020


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