Language Style Matching and CFO Turnover

Abstract

Analyzing the language styles of top executives using conference call transcripts, we find that the language style matching between the CEO and the CFO can predict CFO turnover. Using the CEO-CFO pair fixed effects, we find that the mimicry component of language style matching is negatively associated with CFO turnover. We also find that the effect is mitigated by better corporate governance mechanisms, suggesting that corporate decisions driven by social interactions could be a source of agency costs. The effect is also weaker for CFOs appointed by the current CEO.