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Transcript Exec Tone Divergence

Updated eventData needs: mediumlong onlyshort onlylong short

2011

Lehavy, Li & Merkley (2011) *The Accounting Review*: when management speakers disagree in narrative tone, post-earnings drift is negative. Davis-Ge-Matsumoto-Zhang (2015 RAST) confirms a within-call executive-tone-divergence signal independent of guidance text and analyst forecasts.

Citation only, paper link pending.

In plain terms

Compares CEO tone vs CFO tone on the same earnings call. If the CEO sounds optimistic but the CFO sounds cautious, they're not on the same page — historically bearish.

How it works

When the CEO and CFO speak with different sentiment tones on the same earnings call, post-earnings drift skews negative. We compute |ceo_tone − cfo_tone| per call from FinBERT scores on speaker-tagged transcript segments, then z-score against the firm's own history. A high absolute divergence implies the strategic narrative (CEO) and financial detail (CFO) are misaligned — a bearish setup. Negative z (unusually aligned tones) acts as a confidence proxy.

Live results

0 times picked on its own · 3 times inside a blend (3 beat the stock) · updated 2026-06-06

This strategy is a frequent ingredient in blends that combine a few strategies on one stock. It has contributed to 3 such blended picks (3 of which beat simply holding the stock). Picking it on its own is only one of the ways it shows up.

How its picks scored vs. buy & hold

Each pick is graded on a recent year it was never tuned on, against simply owning the same stock

Where its edge concentrates

Share of picks in each company-size group that beat buy & hold

How often it trades

Active vs. patient. Bars on the left mean it waits for rare setups; bars on the right mean it trades often

Return vs. buy & hold

How much each pick beat or trailed simply owning the stock over the test year (extreme microcap moves trimmed)

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Data dependencies

Daily prices
Adjusted-close OHLCV for every US-listed ticker; primary price feed.
Transcript finbert scores
A data feed this strategy reads, refreshed on its normal schedule.

Expected edge

Reported return: ~3-4% ann. L/S (Davis-Ge-Matsumoto-Zhang 2015 follow-up)
Tested over: 1995-2010

Modern FinBERT-driven replications report ~3-4% annual long-short on the absolute tone-gap, z-scored against the firm's own history.

Related families

Transcript Finbert Qa DispersionFilings, Insiders & Ownership

Listens to how steady management's tone is during analyst Q&A. If answers swing between confident and defensive, it usually signals trouble ahead.

Transcript Cfo Qa DefensivenessFilings, Insiders & Ownership

Specifically measures the CFO's tone swings during the analyst Q&A portion. When the CFO oscillates between positive boilerplate and defensive clarifications, expect a forward miss.

Transcript Analyst FrustrationFilings, Insiders & Ownership

Measures the tone of the ANALYSTS asking questions, not management's answers. When their questions sound frustrated or skeptical, the stock tends to drift down over the following weeks.

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