Stock Analysts Make Investment Recommendations On Not Just What Managers Say, But How They Say It

From The Journal Of FINANCE, "The Power of Voice: Managerial Affective States and Future Firm Performance" by William J Mayew and Mohan Venkatachalam:

We measure managerial affective states during earnings conference calls by analyzing conference call audio files using vocal emotion analysis software. We hypothesize and find that, when managers are scrutinized by analysts during conference calls, positive and negative affects displayed by managers are informative about the firm's financial future. Analysts do not incorporate this information when forecasting near-term earnings. When making stock recommendation changes, however, analysts incorporate positive but not negative affect. This study presents new evidence that managerial vocal cues contain useful information about a firm's fundamentals, incremental to both quantitative earnings information and qualitative “soft” information conveyed by linguistic content. [Emphasis Added].

Investment markets are very efficient.