Editor’s note: Este artículo está traducido al español.

Actions speak louder than words — except, maybe, on earnings calls.

Investors may be more likely to place financial stake in a company if they learn about that company’s future plans through the written word and not increasingly common audio or visual formats, like quarterly video calls in which CEOs discuss company performance with shareholders, according to a new UNLV study.

“Video presentations — we view them as sleek and professional and credible, and they are, but there might be more of a focus on the nonverbal behavior of those videos and less of a focus on the content of the message itself,” said Scott Jackson, assistant professor of accounting at UNLV and co-author of the study with researchers at the University of Massachusetts Amherst.

CEOs are tasked with making sure they’re maximizing shareholders’ return on their investment, Jackson said, which means they have an obligation to periodically report company performance to investors.

This study is motivated by that, he continued, and how companies are reporting information to facilitate decision-making on the part of the users of its financial statements.

Corporate governance — CEOs’ reporting of information and how that impacts users —is a key part of accounting and the global market, because if reporting is poor then there will be poor capital allocation happening at large, Jackson said.

“My question going into this was, ‘Well, how does participating with this event live through a video — how does that impact the processing of the information?’ ” he said, referring to shareholder calls. “ ‘How does that impact perceptions from the investor side on what the company is going to do?’ ”

In he and his colleagues’ experiment, MBA students acted as investors either by watching a video where a CEO talks about a company’s plans or by reading the written transcript after the fact. They then measured the pseudo-investors’ willingness to invest in the company.

“What we’re saying with our study is that the videos, and we also find the same effect with audio … that basically adds in some additional nonverbal behavior, which increases the overall information processing requirements for investors,” he said. “And they basically have other things to focus on, and the nuances of the language get lost.”

Researchers also tweaked the language of the CEO so that they used more active voice and made “future events seem closer to the present,” testing how the wording they used to describe company plans impacted investment.

For example, Jackson said, if a biopharmaceutical company talks about the likelihood of FDA approval for a candidate drug in the present tense, the study showed that investors are more likely to perceive that event closer to a reality and therefore more likely to invest.

“If I’m talking about these events as some far-off, future thing, that actually does impact the perceived distance of that event,” he said. “But the interesting thing is that we only find that in the text conditions. We don’t find that in the video conditions.”

Ultimately, Jackson said, the study shows that the targeted language a company uses to talk about its future — like active voice — isn’t going to have as strong of an impact in video and similar formats as it would have in written modes of communications.

“We don’t want to discount the power of written communication,” he said.

Jeff Saling, executive director of StartUpNV, said he was surprised by the results of the study and the conclusion that investors are somehow more enthusiastic after reading something written versus seeing someone speak. StartUpNV is a nonprofit business accelerator that supports startups in Nevada.

“It just seems to lose something when it’s coming to you electronically,” he said. “So as opposed to them being there — you can read their body, you can read their expressions, you can read their gestures. It just makes me feel like I’m hearing a more complete story, and that can be to the benefit of somebody or to the detriment, depending on what vibe they’re leaving with you.”

Communication styles are critical for CEOs when it comes to how they relate to investors, Saling said. As an investor, he added, he wants to see that a founder or CEO is articulate in communicating about their company and why someone should invest.

He additionally wants to see that a founder can communicate with other investors, said Saling, who is also a leader for FundNV, a preseed venture capital fund for StartUpNV accelerator companies.

“Because even if he satisfies us and we make an investment, I want to be confident that the founder — the CEO in particular — can go out and raise additional money,” Saling said. “That they inspire confidence generally from investors, not just from me. … Because if they can’t, then my investment is at risk.”

The research coincides with an ongoing interest by the Securities and Exchange Commission in the tone of a company on its earnings calls, Jackson said, and in the SEC’s efforts to protect investors and guarantee there aren’t discrepancies between what a company reports to the SEC and what they report to shareholders on a call.

“I would definitely say that the SEC is … interested in the tone, and on a related note, the language that’s being used in the earnings calls,” he said. “Because they don’t want investors to be, essentially, persuaded — or to be duped — when the underlying economics of the company doesn’t support such a stance.”