Corporate Culture Talk and Firm Quality: Does Teamwork Make the Dream Work?

This study examines how corporate culture words spoken in earnings calls impact future firm quality. The authors examine the corporate culture intensity in earnings conference calls for North American and European stocks between 2010 and 2024. They find an increasing trend among companies to talk about corporate culture, especially in the United States. They find the frequency of corporate culture vocabulary in earnings calls to be statistically significant in its relationship to future firm quality. However, the relationship is nuanced and depends on whether the words occur in the prepared management presentation section or the more spontaneous Q&A section. Increasing corporate culture words in the prepared presentation, especially around topics relating to integrity and teamwork, is often related to negative future firm quality. This suggests that managers may use corporate culture words to obfuscate in earnings calls.