Cole Short Explores CEOs' Strategic Negativity in the Strategic Management Journal

In their newly-published study in Strategic Management Journal (SMJ), Pepperdine Graziadio faculty member Cole Short, along with co-authors, address the following: Why are CEOs sometimes negative even when good things happen? Titled "Accentuate the Positive? Strategic Negativity Amid the Hazard of High Expectations," the study challenges the conventional wisdom that CEOs should place their organizations in the best possible light when interacting with outside stakeholders. Instead, it investigates how CEOs strategically employ negativity to manage soaring expectations.

The research team analyzed 7,330 quarterly earnings calls from 370 companies spanning from 2008 to 2019. They focused on instances where CEOs faced positive earnings surprises around key turning points in the fiscal year, creating the motive and opportunity for executives to combat the risk of elevated expectations. Through its analyses, this research reveals that CEOs tend to use strategic negativity in these pivotal instances to temper stakeholder optimism and protect the firm's future standing.

The findings shed light on the interplay between CEO communication strategies and stakeholder perceptions. The authors' research challenges traditional assumptions in public relations and stakeholder strategy, opening avenues for future work in understanding how CEOs navigate the balance between managing expectations and delivering favorable outcomes.

Read the research here.