By analyzing the Q&A portions of earnings and conference calls, Rice University researcher found that outlooks and verbiage varied between people with cultural differences. rawpixel.com/Pexels

It's Alibaba's latest earnings call, and CEO Daniel Zhang is fielding questions during a Q&A. An analyst from the U.S. thinks Zhang sounds cautious, and leaves his forecast as is. But another analyst, who grew up in Shanghai as Zhang did, notes a certain cheerful nuance in his tone. After the call, she revises her earnings forecast for Alibaba upward. The market jumps.

It's an anecdote reported from earnings calls time and again: when an analyst and manager both come from the same, collectivist culture, the analyst somehow seems able to discern unspoken meaning in the manager's tone. This ability to detect underlying optimism or pessimism prompts these analysts to adjust their forecasts ⁠— and the market responds.

In a recent study, Rice Business professor Patricia Naranjo proved that this unspoken communication is real. When both analyst and manager in an earnings call come from collectivist cultures ⁠— that is, cultures that prize the group over the individual ⁠— the effect on the market is measurable,

Working with colleagues Francois Brochet of Boston University and Gregory S. Miller and Gwen Yu from the University of Michigan, Naranjo found that after an earnings conference call, markets responded more dramatically to revisions from analysts who had the same, collectivist ethnicity as the C-suite executives who spoke. The results suggest these "intra-cultural analysts" play a key role in getting stock prices to reflect managers' true outlook.

To measure this phenomenon, Naranjo and her team first amassed a sample of English-language earnings conference call transcripts from 2002 to 2012. The calls occurred within the three days around an earnings announcement. The final sample consisted of 57,740 conference calls held by 5,021 unique firms from across the globe.

The 24,901 executives from 42 countries who took part in the calls were mostly CEOs and CFOs, but there were also COOs, CMOs and IROs, among others. Of the managers, six percent were female and ten percent had a post graduate education. The average age of the executives was 52.77.

The researchers began with the premise that ethnicity helps shape an outlook that is either more or less individualistic. The researchers then assigned managers and sell-side analysts to likely ethnic groups, based on first and last names and an ethnicity-name matching technique. Assigned groups included Anglo-Saxon, Chinese, European, Hispanic, Indian, Japanese, Korean, Russian/Slavic, and Vietnamese.

Next, the researchers measured each ethnicity's individualism outlook, using an index based on analysis of 88,000 IBM employees in 72 countries. Unsurprisingly, Anglo-Saxons rated the highest on the individualism scale, followed by Europeans. Koreans and Chinese were the least individualistic, and were categorized as more group-oriented.

Now it was time to test the hypothesis. Did managers from more individualistic cultures have a more optimistic tone during conference calls? The prediction was based on psychology research showing that independent cultures – typically Western ⁠— place more emphasis on influencing individuals through shows of self-confidence and optimism. Because Q&As tend to be more spontaneous than scripted calls, Naranjo and her colleagues zeroed in on the Q&As to conduct their analysis. Their hypothesis proved correct: the managers from individualistic cultures did indeed speak with a more positive tone during the calls. They also used more first-person pronouns as they spoke.

The finding held true even for executives from individualistic cultures who had studied or worked in group-oriented cultures. Though these executives weren't quite as positive-sounding as counterparts who hadn't spent time in group-oriented cultures, the researchers concluded that the cultural traits the executives inherited from their native ethnic group were long-lasting.

Overall, the researchers also found, CEOs tended to speak more positively and use more singular first-person pronouns on average. Female managers used less optimistic language, and older managers tended to adopt a more pessimistic tone, but also used more singular first-person pronouns.

Finally, those analysts who shared a group-oriented cultural background with the managers on a conference call responded more strongly to the managers' tone ⁠— suggesting that they recognized the effect of culture on a speaker's tone of voice. Collectivist managers, as a rule, used less optimistic language.

When Naranjo's team studied individualistic analysts matched with group-oriented managers, the analysts' response was not as strong. Nor was there any pronounced special response when an analyst from a group-oriented culture was paired with an individualistic manager. When analysts are from different backgrounds as managers, in other words, there's no evidence that they will strongly revise a forecast in response to tone.

For investors tuning in to company conference calls, the findings speak volumes. For analysts and executives who share the same, collectivist background, important messages can go unspoken ⁠— and still be understood. Not only that, but when these "intra-cultural analysts" read between the lines and act on their intuitive cultural knowledge, the markets listen. Investors should take note as well.

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This article originally appeared on Rice Business Wisdom.

Patricia Naranjo is an assistant professor of accounting at Jones Graduate School of Business at Rice University.

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These are the events to attend each day during the Houston Tech Rodeo 2021

where to be

For the second year, Houston Exponential has tapped into the Houston innovation ecosystem to coordinate a week of events to speak to the city's startups, investors, and startup development organizations.

Houston Tech Rodeo will feature over 160 events between May 16 to 23 both online and all across town. From panels and meetups to office hours and pitch events, there's a lot to navigate in the second annual week. For a complete list of Tech Rodeo events (most of which are free), head to the website.

Here are the events you should make sure not to miss. (InnovationMap is a partner for the event.)

Note: You must register for HTR to be able to register for each event. For that reason, the event pages aren't linked directly. Find the information for each event through the HTR event website under the agenda tab, then sort by the day to find the specific event.

Monday: Gettin' in the Game with Master P: A Fireside Chat

The second annual Houston Tech Rodeo kicks off with hip-hop mogul, actor, producer, entrepreneur, and philanthropist, Percy (Master P) Miller on Monday, May 17, at 8 pm. "Gettin' In the Game with Master P" will be an exclusive fireside chat with the legend himself, interviewed by A-List Angels author and former Forbes editor, Zack O'Malley Greenburg. Hear about Master P's journey going from an international rap artist to a CEO, avid investor, and founder of Nemesis RR-- adding diversity in the automotive industry and empowering a culture of dreamers.

The event is free and available online. Register online.

Other Monday online events not to miss:

  • 11 am — HTX: Building a Thriving & Inclusive Innovation Ecosystem — join leaders from across the region's startup ecosystem, including Halliburton Labs, DivInc and The Ion, as they discuss how Houston has become a thriving hub for digital technology while fostering a culture of inclusive innovation.
  • 3 pm — All Roads Lead to Houston - Cross Industry Collaboration, the Intersection of Innovation — this event will focus on the "how" rather than "why", systemic barriers to collaboration, and available resources to analyze, de-risk and solve technology problems through meaningful collaboration.

Tuesday: Unleashing Innovation for Resilience in Disaster and Risk Mitigation

Tired of the hurricanes, snow and ice, COVID and just about every other disaster affecting Houstonian's businesses, homes, communities? Join risk mitigation experts for an in-person and virtual panel on May 18 at 2 pm. The panelists will address how Greater Houston becomes an innovation hub for pre-disaster and risk mitigation across droughts and floods, spills and leaks, fires and explosions, health and pandemics...and engages diverse populations for inclusion as entrepreneurs and mitigated locations.

The event is free and available online. Register online.

Other Tuesday online events not to miss:

  • 11:30 am — Demystifying Med Tech & Digital Health InvestmentsAttend this event to learn from the experts on what investors are seeking in digital health and med tech.
  • Noon — Made in Houston: Building Houston's Digital FutureHouston is on a mission to lead the way in digital transformation. How governments and corporations should accelerate the use of tech solutions and services while balancing the concerns of individuals on the adoption of such tools?
  • 5 pm (hybrid) — HTX Sports Tech: Panel & Happy Hour — HTX Sports Tech is hosting an in-person and online happy hour discussion between Houston's esports and sports industry leaders as we'll discuss the landscape of the esports and sports tech industry, share ideas on the role the industry can impact Houston's developing tech ecosystem, and opportunities to shape the future of the industry through innovative and collaborative efforts.

Wednesday: How Will Innovation Create a Diverse Rising Tide Within Houston's Ecosystem?

Houston is building a thriving innovation ecosystem, but innovation itself won't advance diverse economic prosperity given the status quo. So the question is…how will Houston leverage the city's biggest asset — its diversity — to maximize our potential? Panelists discuss at the online event on May 19 at 11 am.

The event is free and available online. Register online.

Other Wednesday online events not to miss:

  • 11 am — The Big Deal with EsportsDid an esports tournament really sell out the Staples Center? Did the winner of the Fortnite World Cup really make more than Tiger Woods in the Masters? Is esports really bigger than Major League Baseball? Join the discussion on how esports is transforming the business of competitive entertainment.
  • 3 pm — How 3D Printing Can Transform Houston's Manufacturing LandscapeJoin Houston 3D printing experts as they discuss the changing manufacturing landscape of the city and highlight the importance of innovation, economic impact, and sustainability through the adoption of industrial 3D printing technologies.
  • 4 pm — Rice Business Entrepreneurship Association Presents: Throw Your Wild Idea into the Arena First Pitch Competition Have you identified a problem space and a tech-enabled potential solution? The Rice Business Entrepreneurship Association wants to hear your early-stage wild idea. Come make your 90 second pitch and seek advisors, team members, and helpful feedback on your concept. Submit your info here.

Thursday: Female Founders' Tough Lessons Learned

Have an idea for a startup, already launched and building your startup, or just want to hear from those who've already been there? Join a powerhouse panel of female startup founders on May 20 at 9:30 am. Listen as the panelists share their journey and entrepreneurial struggles, and what it really takes to launch and run a startup.

The event is free and available online. Register online.

Other Thursday online events not to miss:

  • 11 am — BORN GLOBAL — Houston Tech Rodeo's International track will offer thoughtful discussions on the hour beginning at 11 am with a keynote.
  • 2 pm — Creating Space (and Tech) for DiversityA diverse panel of experts in space and technology will speak on their experience in these fields.

Friday: $50k Houston Investment Challenge

The Capital Factory challenge will occur on May 21 at Houston Tech Rodeo in partnership with Houston Exponential and will feature five technology startup finalists from greater Houston that will be evaluated by a panel of successful entrepreneurs and venture capitalists. One will walk away with a $50,000 investment.

The event is free and available online. Register online.

Other Friday online events not to miss:

  • 11 am — FemTech Panel — Join a virtual discussion with femtech leaders brought to you by FemTech Focus.
  • 1 pm — Innovation at Scale: Boosting Climatetech and Clean Energy Startups — Join Greentown Labs Houston for a virtual panel on incubating and supporting clean energy startups. The panel, featuring leaders from the regional climatetech innovation ecosystem and moderated by Greentown Houston Launch Director Juliana Garaizar, will discuss how to best set up startups for success and scale.

4 Houston companies clock in among America’s best employers, says Inc.

happy workers

Houston has already been heralded as a hotbed for innovation. Now, a handful of local companies are in the spotlight as the best places to work.

Four Houston companies are among 429 businesses named May 12 to Inc. magazine's 2021 list of the country's best workplaces. They are:

  • Marketing and PR firm CKP, Houston.
  • Environmental restoration company Ecosystem Planning and Restoration, Tomball.
  • IT automation platform Liongard, Houston.
  • Online recruiting service WizeHire, Houston.

"We've taken steps, especially during the pandemic, to build an amazing team and inclusive culture that is rooted in collaboration," Liongard CEO Joe Alapat says in a news release. "I am proud every day of the work this team is doing and the positive impact we're having on the managed services industry, and thrilled that our employees share our excitement and enthusiasm."

Meanwhile, 11 Austin companies receiving kudos are:

  • 9Gauge Partners, a business management consulting firm.
  • AgileAssets, a provider of transportation management software.
  • AlertMedia, an emergency communication and monitoring platform.
  • Decent, a provider of health insurance.
  • Fourlane, a provider of QuickBooks support.
  • Made In Cookware, an e-commerce startup that sells pots, pans, and other cookware.
  • Mighty Citizen, a branding, marketing, and communications firm.
  • OJO Labs, a platform for buying and selling homes.
  • Ontic, a company whose software helps companies address physical threats.
  • Q1Media, a digital media company.
  • The Zebra, an insurance marketplace.

Nick Soman, founder and CEO of Decent, says his company seeks to trust, respect, and appreciate every employee.

"This year that has meant quickly helping employees who lost power during an unprecedented snowstorm find a warm place to stay and offering unlimited time off," Soman says in a news release. "Being recognized as a top workplace is a special honor for Decent. Our people are at the heart of our company. They foster our amazing culture and drive our consistently outstanding customer service."

Lukas Quanstrom, CEO of Ontic, says his company is committed to upholding the core values, standards, and practices that contributed to the Inc. honor.

"Over the past year, the Ontic team has experienced rapid growth reinforcing how important our supportive, entrepreneurial culture is to nurturing talent and prioritizing our employees' overall welfare," Quanstrom says in a news release.

Each nominated company took part in an employee survey, conducted by Quantum Workplace, on topics including management effectiveness, perks, and employee growth. Also, an organization's benefits were audited to help determine the employer's standing.

Elsewhere in Texas, seven Dallas-Fort Worth employers, four Houston-area employers, and one San Antonio employer made the Inc. list.

Dallas-Fort Worth area

  • Staffing and recruiting firm BridgeWork Partners, Dallas.
  • Commercial real estate services company esrp, Frisco.
  • Staffing agency Frontline Source Group, Dallas.
  • PR and marketing firm Idea Grove, Dallas.
  • HVAC and plumbing warranty company JB Warranties, Argyle.
  • Technical consulting firm Stratosphere Consulting, Dallas.
  • NetSuite consulting firm The Vested Group, Plano.

Inc. highlights esrp's employee emergency fund, which offers "a financial lifeline for a range of life events, including funerals, medical emergencies, and welcoming new grandchildren. The omnipresent resource is funded through anonymous employee donations."

San Antonio

The only San Antonio company to make the 2021 list was IT services provider Mobius Partners.

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This article originally ran on CultureMap.