From modesty to market: shareholder reactions to humility rhetoric in family and nonfamily firms under media scrutiny

Paul Sanchez (), Robert J. Pidduck (), Duygu Phillips (), Joshua J. Daspit () and Daniel T. Holt
Additional contact information
Paul Sanchez: Iowa State University
Robert J. Pidduck: Old Dominion University
Duygu Phillips: University of Delaware
Joshua J. Daspit: Texas State University
Daniel T. Holt: Louisville University

Small Business Economics, 2024, vol. 63, issue 2, No 11, 755-780

Abstract: Abstract Family firms are typically associated with a respected system of values, yet the impact of such values on shareholder reactions remains to be understood. We examine the presence of humility rhetoric in corporate communications, characterized by language emphasizing modesty and collaboration, and its effect on shareholder reactions for both family and nonfamily firms. Analyzing 2250 shareholder letters from S&P 500 family and nonfamily firms and 1460 shareholder letters from small and medium-sized family and nonfamily firms, this study finds strong evidence supporting the positive impact of humility rhetoric on shareholder reactions for family firms. Further, interesting effects emerge when considering the influence of positive and negative media coverage. We bolster these findings with a sample of small and medium-sized family and nonfamily businesses and find consistent results. Our findings help advance the economic theory of family firms by highlighting the capital market implications of humility rhetoric in these firms and its importance in shaping positive shareholder reactions. Further, from a methodological perspective, this study introduces a measure of humility rhetoric using a computer-aided text-analysis approach, extending its applicability to broader research contexts.

Keywords: Family and nonfamily firms; Economic theory; Humility rhetoric; Shareholder reactions; Media coverage (search for similar items in EconPapers)
JEL-codes: G32 L21 L25 L26 M21 O51 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11187-024-00878-3

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