The Joint Effect of Strategic Temporal Immediacy and Communication Mode on Investor Judgment

• In Event: Verbal and Earnings Manipulations

Abstract

Abstract: Managers strategically vary the language used to describe firm performance (i.e., temporal immediacy) to either draw themselves closer to positive events or distance themselves from negative events. We examine how strategic temporal immediacy affects investor judgment and how such effects vary with communication mode (text versus video). We find that within text communications, investors have higher investment willingness when managers use strategic (versus non-strategic) temporal immediacy, and such an effect is mediated by investors’ perceptions of temporal distance to future positive events discussed in management disclosures. However, there is no effect of strategic temporal immediacy within video communications, regardless whether managers exhibit neutral or egotistical nonverbal behavior in the video, although we do find lower investment willingness in the egotistical video condition compared to the neutral video condition. Our findings are relevant to researchers and practitioners interested in understanding the joint effect of verbal and non-verbal cues on investor judgment.

Authors

• Scott Jackson, University of Massachusetts-Amherst

• M. David Piercey, University of Massachusetts-Amherst

• Ying Wang, University of Massachusetts-Amherst