The Behavioral Theory of the Firm (BTOF, Cyert & March, 1992) suggests that managers interpret performance feedback and, if feedback is negative, an organizational response involving the organization and its stakeholders such as financial analysts is triggered. Since the interpretation of feedback is crucial for the organizational response, scholars have become interested in how managers differ in their perceptions of feedback. One aspect that has been largely unexplored are the emotions that managers attach to performance feedback. Based on a large, longitudinal sample of conference calls and subsequent analyst evaluations, we study how emotions displayed by managers during conference calls influence analysts’ assessments. We find that managers’ emotions affect how analysts evaluate firms and contribute to the BTOF by studying the role of managers’ emotions and stakeholder’s perceptions in a complex feedback interpretation process.
