During earnings calls, there is more to uncover about companies than just performance updates and financial metrics. Hidden signals in executive language are predictive of share price as well as company and executive outcomes. For those interested in due diligence, risk monitoring, leadership assessment, and industry intelligence: if you skip linguistic analysis of earnings call transcripts, you stand to miss out on valuable insights!
Some companies experiment with Natural Language Processing (NLP) techniques to analyze earnings call transcripts. For example, sentiment analysis, topic analysis, and automatic summarization are conducted to determine what executives are talking about and the projected tone of their communications. However, this barely scratches the surface of what is possible. To get the most out of earnings call analysis, it is critical to investigate how executives frame their messages. This is where psycholinguistic analysis excels.
Receptiviti’s Psycholinguistic Dimensions Turn Earnings Call Transcripts into Insights
The Receptiviti API provides 200+ scientifically validated psycholinguistic dimensions. When used to analyze earnings call transcripts, the Receptiviti API produces quantitative data about the decision-making styles, personalities, and mindsets of leaders and the culture of the executive team.
The Receptiviti API also analyzes the communication style and linguistic fingerprint of executives to help investors understand if an executive is altering their communication when speaking about a specific topic. Linguistic style is correlated to market reaction.
Receptiviti API scores serve as scientifically validated, descriptive insights on their own. Additionally, Receptiviti scores are integrated as features in predictive models alongside outcome data, such as share price movement or profitability metrics, to forecast market conditions and company performance.
Explore CEO Leadership Styles with Our Interactive Earnings Call Demo (click here for the demo)
Want to try earnings call analysis with the Receptiviti API yourself? Explore the leadership styles of over 100 publicly traded companies, including recognizable leaders like Elon Musk and Tim Cook, through our interactive demo.
To create the demo, we analyzed the transcripts of the unscripted Q&A Sessions of earnings calls using Receptiviti’s Interpersonal Circumplex framework, an empirically grounded method for identifying leadership style through language. The Interpersonal Circumplex evaluates how CEOs prioritize goals and interact with their teams based on the degree to which they demonstrate agentic and communal traits. Scores for this analysis reflect an in-group comparison, revealing how executives come across relative to their peers.
Leaders who score as highly agentic are likely results-driven, assertive leaders who exert willpower to pursue personal goals or desires. Those who score highly on communion are likely to cooperate with others and leverage relationships to achieve collective goals. The degree to which a leader balances these two traits characterizes their approach to management. Leadership style has implications on company culture and long term value creation.
What Research Says About Earnings Call Analysis with Receptiviti
Extensive research further validates the relationship between Receptiviti’s psycholinguistic dimensions and various aspects of executive behavior, organizational strategy, and market response. Here are a few examples of studies that use our core science, LIWC, to analyze earnings call transcripts, assess executives' traits, and determine the impact of leadership psychology on key business outcomes:
Findings Overview | Research Paper Title |
Deceptive CFOs are found to use more negations, tentative, and certainty language. | |
CEO conscientiousness is found to be negatively associated with growth. CEO openness is found to be positively associated with R&D intensity and negatively associated with net leverage. | |
Language Style Matching between a company’s CEO and CFO is predictive of CFO pay scale, mergers and acquisitions, and returns at M&A announcements. | |
Leveraging LIWC, the authors asserted, “The semantic features of transcripts are more predictive of stock price movements than sales and earnings per share, i.e., traditional hard data in most of the cases.” |
Unlock a Data-Driven Approach to Executive Insights and Earnings Call Analysis
Receptiviti customers who focus on quantitative analysis, investor relations, due diligence during mergers and acquisitions, executive assessment, leadership development, and similar use cases benefit from applying our data-driven psycholinguistic approach to earnings call analysis.
To discover how Receptiviti can improve your approach to earnings call analysis, contact us.
