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From modesty to market: shareholder reactions to humility rhetoric in family and nonfamily firms under media scrutiny

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Listed:
  • Paul Sanchez

    (Iowa State University)

  • Robert J. Pidduck

    (Old Dominion University)

  • Duygu Phillips

    (University of Delaware)

  • Joshua J. Daspit

    (Texas State University)

  • Daniel T. Holt

    (Louisville University)

Abstract

Family firms are typically associated with a respected system of values, yet the impact of such values on shareholder reactions remains to be understood. We examine the presence of humility rhetoric in corporate communications, characterized by language emphasizing modesty and collaboration, and its effect on shareholder reactions for both family and nonfamily firms. Analyzing 2250 shareholder letters from S&P 500 family and nonfamily firms and 1460 shareholder letters from small and medium-sized family and nonfamily firms, this study finds strong evidence supporting the positive impact of humility rhetoric on shareholder reactions for family firms. Further, interesting effects emerge when considering the influence of positive and negative media coverage. We bolster these findings with a sample of small and medium-sized family and nonfamily businesses and find consistent results. Our findings help advance the economic theory of family firms by highlighting the capital market implications of humility rhetoric in these firms and its importance in shaping positive shareholder reactions. Further, from a methodological perspective, this study introduces a measure of humility rhetoric using a computer-aided text-analysis approach, extending its applicability to broader research contexts.

Suggested Citation

  • Paul Sanchez & Robert J. Pidduck & Duygu Phillips & Joshua J. Daspit & Daniel T. Holt, 2024. "From modesty to market: shareholder reactions to humility rhetoric in family and nonfamily firms under media scrutiny," Small Business Economics, Springer, vol. 63(2), pages 755-780, August.
    • Handle: RePEc:kap:sbusec:v:63:y:2024:i:2:d:10.1007_s11187-024-00878-3
    DOI: 10.1007/s11187-024-00878-3
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    1. Pidduck, Robert J. & Townsend, David M. & Busenitz, Lowell W., 2024. "Non-probabilistic reasoning in navigating entrepreneurial uncertainty: A psychology of religious faith lens," Journal of Business Venturing, Elsevier, vol. 39(4).

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    More about this item

    Keywords

    Family and nonfamily firms; Economic theory; Humility rhetoric; Shareholder reactions; Media coverage;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada

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