What you are and what you do : the effect of noun-verb framing in earnings conference calls

• Main Author: Yang, Yanjia
• Other Authors: TAN, Hun Tong
• Format: Thesis-Doctor of Philosophy
• Language: English
• Published: Nanyang Technological University 2020
• Subjects: Business::Accounting
• Online Access: https://hdl.handle.net/10356/137958
• Institution: Nanyang Technological University

Managers can describe their firms using label nouns (e.g., “our company is a provider of personalized services”) or action verbs (e.g., “our company provides personalized services”). I present a theory predicting that noun-verb framing affects investors’ perceptions of firm stability and growth. I conduct an experiment to jointly test the effect of noun-verb framing and firm type on investor judgments. Consistent with my predictions, investors’ investment focus leans towards stability when investors evaluate mature firms, and strategies framed using label nouns rather than action verbs better fit the overall financial performance, resulting in a more favorable investment judgment. On the other hand, investors’ investment focus leans towards growth when investors evaluate growth firms, and strategies framed using action verbs rather than label nouns better fit the overall financial performance, resulting in a more favorable investment judgment. The findings inform management that the word choices between label nouns and action verbs can benefit the firms.