Beyond financial statements, markets respond to the stories firms tell about technological progress. This study aims to investigate whether industrial robot innovation, as a highly visible signal of smart manufacturing, enables managers to craft persuasive narratives and use an abnormally positive tone to shape investor expectations in earnings conference calls.
Using a sample of China A-share listed firms from 2012 to 2022, the authors empirically examine the effect of industrial robot innovation on managers’ abnormally positive tone and the underlying mechanisms.
This study finds that greater industrial robot innovation leads to more abnormally positive managerial tone in earnings calls, especially under optimistic analyst forecasts or low executive pay. It boosts positive language, reduces negative words and extends Q&A interactions. While this can fuel excessive investor optimism and stock mispricing, firms use robot innovation mainly as a narrative tool rather than for earnings management, as tone management rises while real earnings manipulation declines, indicating a governance effect of technological innovation.
This study extends the literature on technological innovation and managerial narrative, offering practical implications for executives and investor relations departments.
