Essays on CFO and CEO Communication – Evidence from Bank Conference Calls

The first chapter of the dissertation investigates whether CFOs exhibit a dynamic communication style. Using earnings conference calls of U.S. publicly listed banks, I analyze how CFOs evolve as communicators. CFO disclosures (forward-looking and uncertainty statements) follow a non-linear pattern, reflecting the process of CFOs adapting to their position as well as to the task of communicating with analysts. This pattern is also conditional on the type of labor market opportunities CFOs face (shaped by the type of bank they work for). In essence, CFOs may strategically use their disclosures to signal their labor market potential. Additionally, the results are stronger in the case of internally promoted rather than externally hired CFOs. The study provides confirmatory evidence on the individual effects of CFOs through the dynamic nature of CFO disclosures. The second chapter of the dissertation, co-authored with Claudia Imperatore, investigates whether and how the CEO-CFO power relationship is associated with disclosure coordination by CEOs and CFOs, especially in the presence of increased economic policy uncertainty. Using earnings conference calls of U.S. publicly listed banks during the 2010 – 2017 period, we analyze the existence of disclosure coordination or linguistic content matching on the part of CEOs and CFOs. We find that CEOs and CFOs coordinate their message in the presence of power distance (absolute or relative) between them. This result is enhanced when economic policy uncertainty increases. The effect is mainly driven by CEO power and it is more pronounced in banks with stronger equity capital ratios. Analyses across groups of internally promoted CFOs as well as CFOs hired after the incumbent CEO (i.e., co-opted CFOs) offer additional corroborating support that CEOs and CFOs coordinate their disclosures when CFOs are internally promoted or co-opted. Our study provides evidence that individual managers relay a unified message that reflects their power dynamics and is useful to alleviate external uncertainty.