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Leading with Passion

Author

Listed:
  • Elena Loutskina

    (University of Virginia)

  • Oleksandr Talavera

    (University of Birmingham)

  • Shuxing Yin

    (University of Sheffield)

  • Mao Zhang

    (University of St Andrews)

Abstract

We examine how passionate delivery in managerial communication influences market participants' perceptions and decision-making processes. Using machine learning techniques to analyze audio recordings of earnings conference calls, we quantify passion through executives' vocal expressions. Our findings show that passionate delivery enhances analysts' earnings forecast precision and optimism. Analysts quickly learn the informational content of the vocal passion, interpreting it as a positive signal. This effect varies depending on analyst experience and firm information environment. In contrast, investors exhibit a delayed positive response to vocal passion following the earnings call period. Overall, our study provides new evidence that the way executives communicate, beyond the content of their words, plays a critical role in shaping market outcomes.

Suggested Citation

  • Elena Loutskina & Oleksandr Talavera & Shuxing Yin & Mao Zhang, 2022. "Leading with Passion," Discussion Papers 22-10, Department of Economics, University of Birmingham.
    • Handle: RePEc:bir:birmec:22-10
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    File URL: https://repec.cal.bham.ac.uk/pdf/22-10.pdf
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    More about this item

    Keywords

    conference calls; vocal pitch; emotional intensity; soft information; market reaction; managerial capabilities;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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