Using Video to Disclose Forward-Looking Information: The Effect of Non-Verbal Cues on Investors’ Judgments

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.