Working paper/research report

Authors list: Bannier, Christina E.; Pauls, Thomas; Walter, Andreas

Publication year: 2017

DOI Link: https://doi.org/10.2139/ssrn.3051151

Title of series: CFS Working Paper Series

Number in series: 583

Abstract: 

We analyze the market reaction to the sentiment of the CEO speech at the Annual General Meeting (AGM). As the AGM is typically preceded by several information disclosures, the CEO speech may be expected to contribute only marginally to investors’ decision-making. Surprisingly, however, we observe from the transcripts of 338 CEO speeches of German corporates between 2008 and 2016 that their sentiment is significantly related to abnormal stock returns and trading volumes following the AGM. Using a novel business-specific German dictionary based on Loughran and McDonald (2011), we find a negative association of the post-AGM returns with the speeches’ negativity and a positive association with the speeches’ relative positivity (i.e. positivity relative to negativity). Relative positivity moreover corresponds with a lower trading volume in a short time window surrounding the AGM. Investors hence seem to perceive the sentiment of CEO speeches at AGMs as a valuable indicator of future firm performance.

Harvard Citation style: Bannier, C., Pauls, T. and Walter, A. (2017) CEO-Speeches and Stock Returns. (CFS Working Paper Series, 583). Frankfurt am Main: Center for Financial Studies. https://doi.org/10.2139/ssrn.3051151

APA Citation style: Bannier, C., Pauls, T., & Walter, A. (2017). CEO-Speeches and Stock Returns. (CFS Working Paper Series, 583). Center for Financial Studies. https://doi.org/10.2139/ssrn.3051151