Task-oriented speech and information processing

Vineet Bhagwat, Sara E. Shirley and Jeffrey R. Stark

Journal of Banking & Finance, 2024, vol. 161, issue C

Abstract: We examine the impact of task-oriented speech (TOS) on market participants’ ability to process new information, where TOS quantifies a more direct method of communication. Focusing on a widely publicized information event, conference calls, we show that greater TOS is associated with lower ex-post total and idiosyncratic volatility and abnormal trading volume, even after controlling for linguistic characteristics, hard versus soft information, industry effects, and ex-ante implied volatility. TOS also impacts financial analysts: forecast error, forecast dispersion and disagreement are lower during the subsequent quarter. Overall, greater use of TOS increases the ability of financial markets to efficiently evaluate new information.

Keywords: Natural language processing; Earnings conference calls; Firm volatility; Financial analyst (search for similar items in EconPapers)
JEL-codes: G00 G10 G12 G14 G40 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:161:y:2024:i:c:s0378426624000153

DOI: 10.1016/j.jbankfin.2024.107095

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