Journal article
Cheap talk? Strategy presentations as a form of chief executive officer impression management
- Abstract:
-
Research summary: We develop and test a set of hypotheses on investors' reactions to a specific form of impression management, public presentations of overall strategy by Chief Executive Officers (CEOs). Contrary to expectations from a “cheap talk” perspective, we suggest that such strategy presentations convey valuable information to investors, especially in conditions of heightened information asymmetry associated with varying types of new CEOs. Broad empirical support for our theoretical arguments is shown in a sample of strategy presentations carried out by NYSE and NASDAQ listed organizations over 10 years. Our research contributes to literature on new CEOs and impression management. We draw out implications both for management and for further research.
Managerial summary: We examine the impact of public presentations on company strategy by Chief Executive Officers (CEOs) on company stock prices. Adjusting for market movements in general, on average stock prices rose by 1.6 percent following these strategy presentations. Strategy presentations received larger reactions the more the CEO was unfamiliar to investors. Thus, stock price gains for new CEOs in general were 5.3 percent; for external, within‐industry new CEOs, they were 9.3 percent; and for external, outside‐of‐industry new CEOs, they were 12.4 percent. Given that only 40 percent of new CEOs present on strategy in their first 200 days post‐appointment, we suggest that new CEOs pay more attention to this potential means of communicating, especially if they are unfamiliar to investors.
- Publication status:
- Published
- Peer review status:
- Peer reviewed
Actions
Access Document
- Files:
-
-
(Preview, Accepted manuscript, pdf, 447.3KB, Terms of use)
-
- Publisher copy:
- 10.1002/smj.2482
Authors
- Publisher:
- Wiley
- Journal:
- Strategic Management Journal More from this journal
- Volume:
- 37
- Issue:
- 12
- Pages:
- 2413-2424
- Publication date:
- 2016-03-08
- Acceptance date:
- 2015-11-11
- DOI:
- EISSN:
-
1097-0266
- ISSN:
-
1097-0266, 0143-2095
- Pubs id:
-
pubs:612972
- UUID:
-
uuid:6ace1577-07ca-44c9-8e40-6dcfc041d7b3
- Local pid:
-
pubs:612972
- Source identifiers:
-
612972
- Deposit date:
-
2016-04-07
- ARK identifier:
Terms of use
- Copyright holder:
- John Wiley and Sons, Ltd
- Copyright date:
- 2016
- Notes:
- Copyright John Wiley & Sons, Ltd. This is the accepted manuscript version of the article. The final version is available online from John Wiley and Sons, Ltd at: https://doi.org/10.1002/smj.2482
If you are the owner of this record, you can report an update to it here: Report update to this record