Does Executive Temperament Supersede Disclosure Content? Evidence from Weather Effects during Earnings Conference Calls

Abstract

Earnings conference calls represent an important communication channel for investors to observe managerial behavior. We examine the impact of executive temperament using seasonally-adjusted weather conditions at executive locations during these calls. Using a large sample of earnings conference calls from 2006 to 2017, we find that managers speak more negatively and with less (more) quantitative information (uncertainty) when locally-adjusted weather conditions are poor. Managers also exhibit more (less) extreme negative (moderate) language. Our results remain significant after adding controls for investor mood, separating firms from big and small states, mediation tests, firm fixed effects, executive fixed effects, using abnormal tone, and propensity score matching. Incremental to textual measurements, our findings suggest that exogenous effects of bad weather significantly impact manager temperament that the market views negatively.