The impact of executive tone divergence on stock price crash risk: evidence from earnings communication conferences

Purpose Existing research shows that executive tone influences market expectations, corporate information quality and investor decisions but lacks systematic analysis of executive tone divergence, fails to quantify divergence from a team decision-making perspective and does not clarify its underlying mechanisms affecting stock price crash risk. Design/methodology/approach We use a sample of China A-share listed companies from 2005 to 2022 and examine the impact of executive tone divergence on stock price crash risk in earnings communication conferences and its mechanism. Findings Empirical results show executive tone divergence is significantly negatively linked to stock price crash risk. Mechanism analysis reveals this negative effect is stronger under conditions like high net positive tone, high question and answer (Q&A) text similarity, low Q&A content richness, good information disclosure quality or strong financial regulation. Cross-sectional analysis on executive characteristics indicates that without equity incentives, with financial backgrounds, holding vertical positions in shareholder units or purchasing directors' and officers' insurance, executive tone divergence more effectively reduces crash risk. Research limitations/implications Our study only statically studies the impact of executive tone divergence, without dynamically examining its long-term effects and interaction with corporate strategy adjustments. Practical implications Our study helps investors evaluate the risk of stock price crash and investment value through executive tone divergence in earnings communication conferences. Originality/value Our findings extend the theoretical framework on executive communication by incorporating the dimension of team-level tone divergence and its impact on crash risk and investor decision-making.