Using Video to Disclose Forward-Looking Information

The Effect of Non-Verbal Cues on Investors’ Judgments

Nicole L. Cade, Lisa L. Koonce, Kim I. Mendoza

Research output: Working paper

Abstract

In this paper, we examine how investors react to the uncertainty surrounding managements’ forward-looking disclosures when communicated either via the traditional channel — a written press release — or via the relatively new and emerging medium of video. Results suggest that at least for the disclosures used in our experiment, there is an asymmetric reaction to forward-looking information depending on the non-verbal cues conveyed by the CEO via video. Specifically, when the CEO’s non-verbal behavior conveys uncertainty, investors react more negatively to the same content delivered via video than via written text. In contrast, when the CEO’s non-verbal behavior conveys certainty, investors react similarly to the video as they do to text disclosures. Our study has implications for firms who are considering this new medium of disclosure.
Original languageEnglish (US)
Number of pages38
DOIs
StatePublished - Mar 30 2017

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Investors
Disclosure
Chief executive officer
Experiment
Press releases
New media
Uncertainty
Uncertainty management

Keywords

  • Non-Verbal Cues
  • New Media
  • Video
  • Forward-Looking Disclosures

Cite this

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AB - In this paper, we examine how investors react to the uncertainty surrounding managements’ forward-looking disclosures when communicated either via the traditional channel — a written press release — or via the relatively new and emerging medium of video. Results suggest that at least for the disclosures used in our experiment, there is an asymmetric reaction to forward-looking information depending on the non-verbal cues conveyed by the CEO via video. Specifically, when the CEO’s non-verbal behavior conveys uncertainty, investors react more negatively to the same content delivered via video than via written text. In contrast, when the CEO’s non-verbal behavior conveys certainty, investors react similarly to the video as they do to text disclosures. Our study has implications for firms who are considering this new medium of disclosure.

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