The Financial Times has detailed new research by London Business School Assistant Professor of Accounting Rachel Flam.
Dr Flam and her co-authors Professor Andrew Call (Arizona State University), Dr Joshua Lee (Brigham Young University) and Professor Nathan Sharp (Texas A&M University) examined when managers used humour during public earnings conference calls and how its use shaped the markets’ reaction to earnings news.
The researchers found that investors were more positive when managers used humour on earnings calls and that its use muted market reactions to negative earnings news shared on those calls. Analysts’ revised earnings forecasts were also more favourable when managers used humour while addressing negative earning news on public conference calls.
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