The Weekly Treasure, Week of November 6th, A good joke can offset bad earnings

Stay Updated with Finance and Economy News | The Weekly Treasure
Ben Verschuere - Chief Investment Officer
November 6, 2023

Hi Treasure Friends,

We hope you had a great weekend. The most important news last week in the economy was the deceleration in the job market growth with the economy adding 150k job last month.

What the Treasure Team is reading​

​​From the Treasure chest...

A good joke can offset bad earnings: Researcher from the London School of Economics have uncovered an interesting dynamic in public company earnings call. Using a sophisticated machine learning algorithm, researchers have identified managers’ successful uses of humor during public earnings conference calls. When managers use humor on an earnings call, stock market returns and analyst forecast revisions following the call are more positive, primarily because of a muted response to negative earnings news. Consistent with managers’ successful use of humor being a favorable signal of future firm performance, the researchers found no evidence of a return reversal over the subsequent quarter, and managers’ use of humor predicts more favorable news at the subsequent quarter’s earnings announcement. This study provides new evidence on the use of humor in corporate disclosures, and the findings indicate that humor can meaningfully influence the market response to public earnings conference calls..

Have a great week!

The Treasure Team

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