CEO environmental communication, speech acts, and firm value

Abstract Signaling theory predicts that communication, such as by CEOs, might complement observable environmental engagement by a firm, by reducing information asymmetry. Yet it remains unclear whether firms with stronger environmental engagement communicate more about these efforts and the potential implications for firm value. To analyze 14,523 firm-quarter earnings call Q&A sessions held by 364 publicly listed firms between 2007 and 2022, the current research measures CEO communication about firm environmental engagement and the communicative intent behind such communication by combining MSCI Environmental Pillar Scores, Compustat data, and a fine-tuned DeBERTa model. Firms with stronger environmental engagement communicate less, rather than more, about their efforts during earnings call Q&A sessions. Yet CEO communication about firm environmental engagement can be positively associated with firm value, depending on the communicative intent the CEO indicates, such that assertive and directive speech maintain this positive association, but expressive and commissive speech acts are negatively associated with firm value.