How negative tones in earnings calls shape media narratives

What is it about?

This study examines how the tone of company earnings calls influences subsequent news coverage and stock prices. Analyzing 30 major U.S. companies over a decade, we found that negative language in earnings calls often leads to more negative news stories the following day. Interestingly, when both earnings calls and news stories have negative tones, the impact on lowering stock prices is more significant than either factor alone. Other financial metrics seem to have less influence on news tone compared to earnings call language. These findings highlight the importance of careful communication during earnings calls, as it can shape media narratives and affect stock performance. The research provides valuable insights into how corporate information flows influence financial markets.

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