CEO Language and Stakeholder Attention: The Impact of Ambiguity

CEO Language and Stakeholder Attention: The Impact of Ambiguity

• Ningzi Li, Adjunct Assistant Professor of Organizations and Strategy, Booth School of Business, University of Chicago

Abstract:

Extant literature has found that some organizational communication structures better focus stakeholder attention on managerial priorities. We investigate how managers can use language to achieve similar outcomes. According to our analysis of NASDAQ companies’ earnings calls from 2006 to 2010, ambiguous communication by CEOs focuses analysts’ attention on CEOs’ prioritized issues. Further, drawing on insights from cognition and slack, we examine two important boundary conditions with which managers often contend: diverse stakeholder views and limited firm resources. We find that CEOs’ ambiguous communication focuses analysts’ attention more on CEO prioritized issues when financial analysts’ mental models vary from one another, and when firms have lower slack resources.

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