What is it about?
CEOs with nonnative accents (e.g., Hispanic) may avoid communicating directly with investors via earnings calls for fear of investors’ negative stereotypes. However, we develop theory predicting that stereotypes from the CEO position and from nonnative accents conflict, and that investors who are motivated to reconcile the conflicting stereotypes do so by inferring that the nonnative-accented CEO has exceptional qualities, such as hard work and determination, that allowed him to rise to the CEO position. We find that investors motivated to reconcile the stereotypes (e.g., because of bad earnings news or because they are asked to describe the manager) are more likely to form a positive image of nonnative-accented CEOs and are more likely to invest in their companies.
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Why is it important?
Understanding how stereotypes from nonnative accents affect investor judgments is important given the substantial number of overseas listings, as well as the growing number of non-US firms holding calls in English to reach investors globally. Moreover, CEOs of approximately 9 percent of US companies are foreign-born, as are CEOs of 11.6 percent of Fortune 500 companies, which represent two-thirds of the US GDP. Nonnative accents constitute a fundamental component of impression formation that likely play a key role in investors’ impressions of management. Our study extends previous research by showing that market reactions to conference calls are sensitive to how managers speak and the impressions they transmit by demonstrating that, contrary to popular wisdom, having a nonnative accent may benefit managers and their companies. We further show that the process of social perception in corporate settings is a complex one and that stereotypes from accents can interact with other stereotypes.
Perspectives
This paper addresses an important topic by integrating research from previously insulated areas, such as language attitude, stereotyping, impression formation, and investor reactions to the image managers' transmit. Because accents are difficult to observe and measure in the environment, we conduct experiments with experienced investors and use state-of-the-art experimental techniques to test our theory. We hope you will find our article interesting and thought-provoking.
Leonardo Barcellos
Emory University
It was a pleasure to work with Leo on this project. One thing that I really like about this project is that it reveals the complexity of how stereotypes can influence important judgments. I think it's interesting that while stereotypes can often result in snap judgments, this is not always the case. When stereotypes conflict, the reconciliation process can result in complex but predictable thought patterns.
Kathryn Kadous
Emory University
Read the Original
This page is a summary of: Do Managers’ Nonnative Accents Influence Investment Decisions?, The Accounting Review, July 2021, American Accounting Association,
DOI: 10.2308/tar-2020-0228.
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