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CEO-speeches and stock returns

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  • Bannier, Christina
  • Pauls, Thomas
  • Walter, Andreas

Abstract

We analyze the market reaction to the sentiment of the CEO speech at the Annual General Meeting (AGM). As the AGM is typically preceded by several information disclosures, the CEO speech may be expected to contribute only marginally to investors' decision-making. Surprisingly, however, we observe from the transcripts of 338 CEO speeches of German corporates between 2008 and 2016 that their sentiment is significantly related to abnormal stock returns and trading volumes following the AGM. Using a novel business-specific German dictionary based on Loughran and McDonald (2011), we find a negative association of the post-AGM returns with the speeches - negativity and a positive association with the speeches - relative positivity (i.e. positivity relative to negativity). Relative positivity moreover corresponds with a lower trading volume in a short time window surrounding the AGM. Investors hence seem to perceive the sentiment of CEO speeches at AGMs as a valuable indicator of future firm performance.

Suggested Citation

  • Bannier, Christina & Pauls, Thomas & Walter, Andreas, 2017. "CEO-speeches and stock returns," CFS Working Paper Series 583, Center for Financial Studies (CFS).
    • Handle: RePEc:zbw:cfswop:583
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    Cited by:

    1. Christina Bannier & Thomas Pauls & Andreas Walter, 2019. "Content analysis of business communication: introducing a German dictionary," Journal of Business Economics, Springer, vol. 89(1), pages 79-123, February.
    2. Katarina Böttcher & Kerstin Lopatta, 2020. "Gender-Sensitive Language in German Annual Reports," Journal of Management and Sustainability, Canadian Center of Science and Education, vol. 8(4), pages 1-1, March.

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    More about this item

    Keywords

    Textual Sentiment; CEO Speeches; Market Efficiency; Textual Analysis; Annual General Meeting;
    All these keywords.

    JEL classification:

    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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