Jiangxi University of Finance and Economics, China
Drawing upon the behavioral theory of the firm (BTOF) and the literature on communication and sociolinguistics, this research explores why and the extent to which managers use forward-looking language framing in corporate communications. Using the data of public firms in China from 2008 to 2022, we find that firms’ negative performance feedback status quo is positively associated with managers’ use of forward-looking language when communicating with external stakeholders. Furthermore, the tendency of strategically conveying future-oriented language is amplified when investors hold optimistic views regarding the firms’ future earnings potential, yet attenuated when the firms’ frequency of experiencing negative performance feedback in the past is higher and when the environmental uncertainty is higher. In addition, our outcome analysis demonstrates that the utilization of managerial forward-looking language serves to mitigate negative market reactions to firms’ adverse performance feedback. By highlighting the temporal dimension of managerial language, this study offers a valuable perspective on BTOF literature about how managers utilize language as a tool for immediate problem-solving to shape stakeholders’ perceptions of firm’s current performance. Our findings also contribute novel evidence to corporate communication in sociolinguistics and organizational management studies from a temporal perspective, particularly within the context of emerging markets.
