Not only the numbers count: In a 4-minute video interview Prof. Alexander Wagner explains how managerial communication affects market reactions. How does positive and negative language in communicating financial results impact markets?
Druz, Wagner, and Zeckhauser’s paper titled "Reading Managerial Tone: How Analysts and the Market Respond to Conference Calls" deals with the issue in more detail. It builds on existing work that markets react not only to the words used in a communication, but also to the linguistic tone and vocal cues. Thus, the “more subtle aspects of corporate communications also matter.” The key question this paper answers is why the market responds to tone.