James Cicon

Managerial Expectations of Synergy and the Performance of Acquiring Firms: The Contribution of Soft Data

This study examines whether the “soft” information present in merger and acquisition (M&A) announcement press releases contains incrementally valuable news relative to traditional “hard” data. Using the methodology of Loughran and McDonald [2011], we construct measures of synergy expectations and managerial optimism for more than 1,200 M&A announcements over the period 1995–2007. We find that synergy expectations are positively related to announcement period returns, longer-run performance, and the markets reaction to quarterly earnings announcements. Managerial optimism is insignificant for explaining a mergers subsequent performance. We conclude that the soft information contained in M&A announcements concerning synergy expectations can provide useful information to investors.

The power of fear: Facial emotion analysis of CEOs to forecast firm performance

We present a framework to predict the firm performance based on CEOs facial emotion dynamics during video interviews. This is a challenging pattern recognition problem that involves robust detection of various emotional expressions in the uncontrolled environment and classification of spontaneous spatio-temporal data with different personal and biological signature traits. We assess the reliability of outcomes that result from the classification through noise suppression and information maximization with correlation analysis. The experimental results show the strong and positive reaction of firm performance merely to CEOs Fear emotion. We analyze the determinants that affect Fear emotion and find that Fear is more in newer CEO, and is more when CEO has less control over the board of the firm. These findings may contribute to prediction of the market value of firms and actions taken on effective investment.

Words versus Deeds: Evidence from Post-Call Manager Trades

We examine the impact of conference call tones on the direction and magnitude of subsequent manager trades. Our univariate results show that corporate insiders buy company shares following negative-tone conference calls, and sell shares following positive-tone conference calls. This inverse call tone-trading pattern holds for both managers’ introductory sessions and subsequent question and answer (Q&A) sessions. Our multivariate results confirm the univariate call tone-trading patterns and show that contrarian manager trades are mostly driven by managerial selling activity. In contrast to the consistent and strong evidence of managers trading in the opposite direction of their call tones, we find no evidence of managers trading in the same direction of their call tones. We also examine the impact of analyst Q&A challenges on post-call manager trades. Our findings suggest that managers learn from analyst feedback and adjust their post-call trades accordingly.

Firm Performance in the Face of Fear: How CEO Moods Affect Firm Performance

ABSTRACT The authors use facial emotion recognition software to quantify CEO mood. Anger or disgust motivates a CEO to work harder to improve his or her situation; thus firm profitability improves in the subsequent quarter. Happy CEOs are less likely to work on hard or unpleasant tasks; thus profitability decreases in the subsequent quarter. In the short term, fear explains the firms announcement period market performance. However, fear is transient and performance improvement is short term.

Say it Again Sam: The Idiosyncratic Information Content of Corporate Conference Calls

This paper examines the idiosyncratic information-content of corporate conference calls. It studies the determinants, and the consequences, of idiosyncratic information production. To facilitate this study, I develop a novel measure of information-content which analyzes every (idiosyncratic) word choice made by management during both sessions of the call. In a sample of S&P 1500 firms from 2001 to 2012, this new measure of information-content explains cumulative abnormal returns. It shows how CEOs produce (suppress) information during the conference call. It shows how analyst participation in the call improves information production. It shows that a differential value is placed on information conditioned on the market segment of the firm. I contrast the effectiveness of this new measure to that of the conventional methodologies of tone and word-counting. I provide evidence that this new information-content measure is better suited to conference calls than are the other two.