Analysts and investors listening in to the latest round of earnings calls may have heard wildcatter and Halcon Resources CEO Floyd Wilson describe his company’s properties with colorful language or CBS’s Leslie Moonves curse at Fox for its great World Series ratings.
Profanity usage seems to be up this year, but is still down from earlier in the decade, according to an analysis of Seeking Alpha transcripts by CNBC.
A Small Pool of Potty Mouths
The most common uncouth word to show up in conference calls over the last 10 years was “damn,” as in “pretty damn profitable.” Words like “a–” and “s—” also showed up hundreds of times across more than 100,000 transcripts in both positive and negative contexts (as in “we kicked a–!”).
Using a fairly wide definition of profanity that includes most words that are frowned upon in polite society, it’s clear that a small number of companies are responsible for a good portion of foul language in conference calls. These include Cypress Semiconductor, Titan International, Scotts Miracle-Gro, Wynn Resorts and Emerson Electric. Major household names like T-Mobile and Yum Brands are also relatively high on the list.
For the most part, executives stuck to the less offensive curse words, but there have only been a few instances of CEOs dropping f-bombs while talking to investors. We found thousands of profane words in the transcripts we searched, but use of the f-word tends to make people sit up and take notice. While profanity in earnings calls seems to be on the rise compared to the last few years, we didn’t find any CEOs who had used an f-word in the last three years.
What’s That You Said?
One of the most famous examples was from Carol Bartz, CEO of Yahoo in 2009, who criticized the company for having too many management employees compared to engineers. Bartz immediately apologized on the call, saying “I knew that would slip out one of these times.”
At times, executives’ ire was directed at specific analysts. In 2013, natural gas company Encana Corp apologized after an unknown employee could be heard whispering “f—–g a—–e” in response to an analyst’s question. Enron’s CEO also famously employed “a—–e”against a hedge fund manager who questioned the company’s opaque accounting.
Intuitively, the use of R-rated language in a conference call has the possibility to cast corporate leaders in a negative light if the profanity seems inappropriate or unprofessional. On the other hand, there is some evidence that using profanity selectively can make a person seem more intense and persuasive.
If asked whether swear words make a person seem more trustworthy, people will often say no, but if asked to rate the credibility of statements with and without swearwords, the profanity actually seems to make the information seem more believable.
Dirty Mouth, Clean Profits
As a composite index, the companies with relatively high levels of profanity don’t seem to be harmed too much by their word choices. In fact, that index would have beaten the S&P 500 by about 40 points over the past decade, even if that gain is mostly driven by the potty mouths at a few large companies.
Certainly not all profanity helps build confidence in a company. In 2007, CEO Albert Lord of Sallie Mae failed to reassure investors who were growing nervous about certain mortgage-backed securities. The executive appeared “agitated” on the call, leading into a 21 percent drop in the company’s stock price.
“Let’s go,” Lord said as the conference call was wrapping up. “There’s no questions. Let’s get the f— out of here.”