Managerial Diversity and Corporate Communication in Periods of Crisis

This paper employs earnings conference calls to investigate if and how the style of corporate disclosures changes during times of crisis, when information frictions between firms and the market are exacerbated. Furthermore, the paper explores the extent to which managerial traits affect the language of corporate disclosure during crisis. To this purpose, we use a sample of more than 38,000 earnings conference calls between 2006 and 2013 and focus on the 2008 global financial crisis (GFC). Our analysis delivers several key insights. Firstly, we show that the sentiment and the “quantity” of information disclosed change during periods of crisis, generally becoming more conservative. Secondly, our results document that managerial characteristics affect differently the style of corporate communication during crisis. While gender seems to mainly impact the tone of the disclosure, overconfidence and experience affect mostly the “quantity” of information disclosed. Lastly, we find evidence consistent with executives prioritising favourable analysts during the Q&A. Also, financial analysts respond more than investors to managerial diversity.