It's Not What You Say, But How You Say it – Managerial Charisma and Agitation in Earnings Conference Calls

Using a machine learning-based software, we identify two patterns of managerial communication in the question-and-answer (Q&A) part of conference calls: Charismatic communication represents an effort of managers to convey a positive picture of the firm’s situation. Agitated communication is a result of managers being stressed or tense. Our empirical evidence shows that market participants react favorably to charismatic rhetoric, even though it does not convey any useful information on the firm’s economic information. In fact, charismatic communication prompts stronger stock market reactions than the actual content of the Q&A part. Moreover, we demonstrate that managers are more agitated when they present earnings figures that are more inflated by means of discretionary accruals