Why it might pay for CEOs to ‘show humanity’ on analyst conference calls

Management Today — 14 May 2024

New research from Cambridge Judge Business School, the University of Zurich, and the London School of Economics shows that CEOs who express human concern during earnings calls can positively impact their company's share price. Analyzing transcripts from 448 U.S. companies during the COVID-19 pandemic, researchers found that even generic "human care statements" about employees or customers positively affected share prices during and after the crisis.

About half of the CEOs made these statements, and nearly three-quarters were generic rather than action-focused. Companies with more frequent human-centered statements performed better during the pandemic market crash and experienced less stock volatility afterward, suggesting that these statements might signal stability and lead market participants to discount future earnings less.

The findings raise questions for future research, such as why analysts respond to superficial care statements and whether this effect applies to other crises. However, a key takeaway is that leadership is about balancing performance with empathy. As Jochen Menges notes, CEOs who focus solely on business results may miss opportunities to show the expected care for people.

Article by Jane Simms