(Duke University: Durham, N.C.) -- Want the inside track on predicting a company’s profitability and stock returns for the next six months? Listen closely to the CEO.

Whether it’s excitement about an unpublished research result in biotech or disappointment over an order cancellation in manufacturing, top executives’ voices contain hints about the company’s future performance, according to research from Duke University’s Fuqua School of Business published in the American Finance Association’s Journal of Finance.

Fuqua professors William Mayew and Mohan Venkatachalam analyzed the voices of CEOs and CFOs during earnings conference calls for nearly 700 major U.S. corporations. Using commercial software, the researchers monitored subtle vocal cues indicating positive or negative emotional states. They then culled financial records to see if future earnings, stock prices, or analysts’ recommendations corresponded with the vocal cues.

When the managers were excited (a positive emotional state), the stock market responded favorably, future unexpected earnings were higher, and their firms issued positive news releases during the next six months, the researchers found. Conversely, the market viewed a negative emotional state as bad news.

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