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Using video to disclose forward-looking information: the effect of nonverbal cues on investors’ judgments

Author

Listed:
  • Nicole L. Cade

    (University of Pittsburgh)

  • Lisa Koonce

    (The University of Texas at Austin)

  • Kim I. Mendoza

    (University of Illinois at Urbana-Champaign)

Abstract

We conduct two experiments to examine how investors react to nonverbal cues of certainty as displayed by a CEO communicating forward-looking information via the relatively new and emerging medium of video. Results of the first experiment suggest that, at least for the setting we examine, investors react more negatively (do not react more positively) to a video disclosure when the CEO displays nonverbal cues of uncertainty (certainty), relative to the same disclosure delivered via audio or written text. A second experiment reveals that the lack of a positive reaction to the certain CEO in the video may be due to investors’ belief that the CEO has incentives to convey certainty via nonverbal cues. Indeed, even a subsequent good-news realization—which should add credibility to the CEO’s certainty cues—does not change this perception. Our study has implications for firms considering video as a medium for disclosure.

Suggested Citation

  • Nicole L. Cade & Lisa Koonce & Kim I. Mendoza, 2020. "Using video to disclose forward-looking information: the effect of nonverbal cues on investors’ judgments," Review of Accounting Studies, Springer, vol. 25(4), pages 1444-1474, December.
    • Handle: RePEc:spr:reaccs:v:25:y:2020:i:4:d:10.1007_s11142-020-09539-8
    DOI: 10.1007/s11142-020-09539-8
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    Cited by:

    1. Zhang, Shengpeng & Li, Yaokuang & He, Yu & Liang, Ruixin, 2024. "Do vocal cues matter in information disclosure? Evidence from IPO online roadshows in the SSE STAR market," International Review of Financial Analysis, Elsevier, vol. 93(C).

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    More about this item

    Keywords

    Nonverbal cues; Certainty; Video; Forward-looking disclosures;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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