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The effect of manager-specific optimism on the tone of earnings conference calls | SpringerLink
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Article summary:
1. This article examines the effect of manager-specific optimism on the language used in firms’ conference calls.
2. The study finds that manager-specific optimism is a statistically significant determinant of tone, and that observable manager-specific characteristics (e.g., gender, age, educational and career experiences) explain variation in tone.
3. The study also finds evidence that managers’ choice of language influences the market’s interpretation of the firm’s performance.
Article analysis:
The article “The effect of manager-specific optimism on the tone of earnings conference calls” is a well-researched and comprehensive analysis of how manager-specific optimism affects the language used in firms’ conference calls. The authors provide evidence to support their hypothesis that manager-specific optimism has an impact on the tone used in these calls, as well as evidence to suggest that this effect can be observed through observable characteristics such as gender, age, educational and career experiences.
The article is generally reliable and trustworthy due to its use of multiple sources for data collection and analysis, including transcripts from conference calls, wordlists developed by prior studies, and control variables such as firm performance measures and strategic incentives. Furthermore, the authors have taken steps to address potential criticisms by conducting robustness tests based on average tone residuals across different firms for which a manager works and out-of-sample estimations of the effect of manager-specific optimism on tone.
However, there are some potential biases present in the article which should be noted. For example, while the authors have included numerous control variables which would normally be expected to impact the use of positive tone during conference calls, it is difficult to rule out the possibility that time-varying firm effects may still be impacting their results. Additionally, while they have provided evidence for their claims regarding observable characteristics such as gender or age influencing managers' use of language during conference calls, they do not explore any other possible factors which could influence this relationship (e.g., cultural background).
In conclusion, this article provides a thorough examination into how manager-specific optimism affects language used in firms' conference calls; however there are some potential biases present which should be noted when considering its trustworthiness and reliability.