Positive CEO communications can boost company value
The way CEOs present themselves to the public and to shareholders can have a significant impact on company performance, at least according to recent research from the University of British Columbia’s Sauder School of Business. The study revealed that the way CEOs communicate important business results has a measurable impact on the organisation’s stock value. In particular, senior executives…
The way CEOs present themselves to the public and to shareholders can have a significant impact on company performance, at least according to recent research from the University of British Columbia’s Sauder School of Business.
The study revealed that the way CEOs communicate important business results has a measurable impact on the organisation’s stock value. In particular, senior executives that present information with a positive disposition are more likely to see stock prices increase after a company’s earnings announcement.
The results showed that those leaders with a positive outlook saw this carried over to their professional presentations. When earnings announcements and other investor statements were made to the public with this same positive language, the result was a corresponding increase in the business’s stock price.
What’s more, CEOs were found to be more positive overall than chief financial officers (CFOs), while those managers involved in charitable work were also more positive. However, managers who came into their role during a recession were less optimistic overall.
Jenny Zhang, an associate professor at the Sauder Business School, emphasised the unique nature of this research approach.
“Ours is the first study to look at the effect of how managers naturally convey themselves,” she said.
“To do this we tracked the way CEOs and CFOs communicate earnings across their leadership roles at multiple firms to decipher their overall communication style.”
For communications and corporate affairs professionals who have oversight of investor relations, this study highlights the importance of word-choice in communications. By focussing on positive language in announcements from the C-suite, organisations can ensure their presentations to investors also have a positive impact on a company’s overall performance.
With stakeholders also demanding an increasing level of information from companies they invest in, finding the right way to present this information is going to be even more important in the future.
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