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Are Managers 'Under-the-Weather' During Earnings Conference Calls?

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Title:Are Managers 'Under-the-Weather' During Earnings Conference Calls?
Authors:Francis, Bill
Hu, Wenyao
Shohfi, Thomas
Managerial Mood
Earnings Conference Calls
Cloud Cover
Date Issued:29 Aug 2018
Abstract:Earnings conference calls represent an important communication channel between managers and investors. We examine the impact of weather-induced mood on manager behavior during these calls. Using a large sample of earnings conference calls from 2006 to 2017, we find managers speak more negatively and with less (more) quantitative information (uncertainty) when local weather conditions are bad. We further identify that this negative relation is less pronounced for CFOs than CEOs. Financial expertise mitigates negative behavior bias induced by weather and we confirm with subgroups of CEOs with previous financial experience. We document a significantly negatively market reaction to weather-induced behavior that cannot be explained by existing textual analysis methods. Our results remain significant after adding controls for investor mood, separating firms into those from big and small states, mediation tests, firm fixed effects, and propensity score matching. Taken together, our findings suggest that exogenous effects of bad weather significantly impact manager behavior that the market views negatively.
Appears in Collections: 10 Financial: Managerial ability (including CEO reputation)/Stock analysts

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