Persuasive channel choices: Evidence from manager–investor interactions

Managers of public companies communicate with investors through channels such as conference calls and press releases. We develop a linear optimization model that predicts the optimal allocation of positive and negative information across channels, accounting for investors' limited processing capacity and channel‐specific cognitive costs. The model demonstrates how managers can enhance comprehension of favorable messages while deflecting attention from unfavorable ones. Using textual features of positivity, readability, and message length, the model predicts up to 79% of real‐world channel choices across over 24,000 earnings announcements. Firms with lower ESG and Social scores are more likely to engage in selective channeling, suggesting self‐serving motives. Regression analyses using cosine similarity and Jaccard coefficients support the model's mechanics. These results offer practical insights: investors should be cautious with firms exhibiting low stakeholder orientation, while companies can optimize multi‐channel strategies to account for stakeholders' cognitive limitations. Future research could extend the model to richer communication strategies, the persuadee's perspective, and microeconomic signaling frameworks integrating bounded rationality.