Abstract

Building on the literature in linguistics showing that the manner in which individuals speak provides context incremental to the actual spoken words, we study whether uncertainty expressed via the acoustic features of managerial speech in conference calls impacts analyst behavior. Using a novel measure of managerial acoustic uncertainty, we find that when managers sound more uncertain in their responses to analyst questions, analyst forecast dispersion increases, even after accounting for characteristics of the actual language being used by managers and analysts. This finding is consistent with analysts relying less on information conveyed via acoustically uncertain responses, and thus more on information idiosyncratic to the analyst. Furthermore, we find that the association between acoustic uncertainty and analyst forecast dispersion varies predictably with the characteristics of these manager-analyst interactions, such as the specificity and forward-looking nature of the manager’s response. Finally, we find that managerial acoustic uncertainty is positively associated with bid-ask spreads, and that this is concentrated within firms with greater increases in post-conference call forecast dispersion. Our findings suggest that uncertainty expressed in the acoustic features of managerial speech can affect market participants. Furthermore, our study creates and validates an approach to measuring managerial acoustic uncertainty.

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