lasting between about fifteen minutes and two hours. The women then described what they were doing during each episode and chose from a list of twelve adjectives (happy, frustrated, enjoying myself, annoyed, and so on) to characterize their emotions during that time.
When the researchers crunched the numbers, they found a “consistent and strong bimodal pattern”—twin peaks—during the day. The women’s positive affect climbed in the morning hours until it reached an “optimal emotional point” around midday. Then their good mood quickly plummeted and stayed low throughout the afternoon only to rise again in the early evening.7
Here, for example, are charts for three positive emotions—happy, warm, and enjoying myself. (The vertical axis represents the participants’ measure of their mood, with higher numbers being more positive and lower numbers less positive. The horizontal axis shows the time of day, from 7 a.m. to 9 p.m.)
The three charts are obviously not identical, but they all share the same essential shape. What’s more, that shape—and the cycle of the day it represents—looks a lot like the one on page 10. An early spike, a big drop, and a subsequent recovery.
On a matter as elusive as human emotion, no study or methodology is definitive. This DRM looked only at women. In addition, what and when can be difficult to untangle. One reason “enjoying myself” is high at noon and low at 5 p.m. is that we tend to dig socializing (which people do around lunchtime) and detest battling traffic (which people often do in the early evening). Yet the pattern is so regular, and has been replicated so many times, that it’s difficult to ignore.
So far I’ve described only what DRM researchers found about positive affect. The ups and downs of negative emotions—feeling frustrated, worried, or hassled—were not as pronounced, but they typically showed a reverse pattern, rising in the afternoon and sinking as the day drew to a close. But when the researchers combined the two emotions, the effect was especially stark. The following graph depicts what you might think of as “net good mood.” It takes the hourly ratings for happiness and subtracts the ratings for frustration.
Once again, a peak, a trough, and a rebound.
Moods are an internal state, but they have an external impact. Try as we might to conceal our emotions, they inevitably leak—and that shapes how others respond to our words and actions.
Which leads us inexorably to canned soup.
If you’ve ever prepared a bowl of cream of tomato soup for lunch, Doug Conant might be the reason why. From 2001 to 2011, Conant was the CEO of Campbell Soup Company, the iconic brand with those iconic cans. During his tenure, Conant helped to revitalize the company and return it to steady growth. Like all CEOs, Conant juggled multiple duties. But one he handled with particular calm and aplomb is the rite of corporate life known as the quarterly earnings call.
Every three months, Conant and two or three lieutenants (usually the company’s chief financial officer, controller, and head of investor relations) would walk into a boardroom in Campbell’s Camden, New Jersey, headquarters. Each person would take a seat along one of the sides of a long rectangular table. At the center of the table sat a speakerphone, the staging ground for a one-hour conference call. At the other end of the speakerphone were one hundred or so investors, journalists, and, most important, stock analysts, whose job is to assess a company’s strengths and weaknesses. In the first half hour, Conant would report on Campbell’s revenue, expenses, and earnings the previous quarter. In the second half hour, the executives would answer questions posed by analysts, who would probe for clues about the company’s performance.
At Campbell Soup and all public companies, the stakes are high for earnings calls. How analysts react—did the CEO’s comments leave them bullish or bearish about the company’s prospects?—can send a stock soaring or sinking. “You have to thread the needle,” Conant told me. “You have to be responsible and unbiased, and report the facts. But you also have a chance to champion the company and set the record straight.” Conant says his goal was always to “take uncertainty out of an uncertain marketplace. For me, these calls introduced a sense of rhythmic certainty into my relationships with investors.”
CEOs are human beings, of course, and therefore presumably subject to the same daily changes in mood as the rest of us. But CEOs are also a stalwart lot. They’re tough-minded and strategic. They know that millions of dollars ride on every syllable they utter in these calls, so they arrive at these encounters poised and prepared. Surely it couldn’t make any difference—to the CEO’s performance or the company’s fortunes—when these calls occur?
Three American business school professors decided to find out. In a first-of-its-kind study, they analyzed more than 26,000 earnings calls from more than 2,100 public companies over six and a half years using linguistic algorithms similar to the ones employed in the Twitter study. They examined whether the time of day influenced the emotional tenor of these critical conversations—and, as a consequence, perhaps even the price of the company’s stock.
Calls held first thing in the morning turned out to be reasonably upbeat and positive. But as the day progressed, the “tone grew more negative and less resolute.” Around lunchtime, mood rebounded slightly, probably because call participants recharged their mental and emotional batteries, the professors conjectured. But in the afternoon, negativity deepened again, with mood recovering only after the market’s closing bell. Moreover, this pattern held “even after controlling for factors such as industry norms, financial distress, growth opportunities, and the news that companies were reporting.”8 In other words, even when the researchers factored in economic news (a slowdown in China that hindered a company’s exports) or firm fundamentals (a company that reported abysmal quarterly earnings), afternoon calls “were more negative, irritable, and combative” than morning calls.9
Perhaps more important, especially for investors, the time of the call and the subsequent mood it engendered influenced companies’ stock prices. Shares declined in response to negative tone—again, even after adjusting for actual good news or bad news—“leading to temporary stock mispricing for firms hosting earnings calls later in the day.”
While the share prices eventually righted themselves, these results are remarkable. As the researchers note, “call participants represent the near embodiment of the idealized homo economicus.” Both the analysts and the executives know the stakes. It’s not merely the people on the call who are listening. It’s the entire market. The wrong word, a clumsy answer, or an unconvincing response can send a stock’s price spiraling downward, imperiling the company’s prospects and the executives’ paychecks. These hardheaded businesspeople have every incentive to act rationally, and I’m sure they believe they do. But economic rationality is no match for a biological clock forged during a few million years of evolution. Even “sophisticated economic agents acting in real and highly incentivized settings are influenced by diurnal rhythms in the performance of their professional duties.”10
These findings have wide implications, say the researchers. The results “are indicative of a much more pervasive phenomenon of diurnal rhythms influencing corporate communications, decision-making and performance across all employee ranks and business enterprises throughout the economy.” So stark were the results that the authors do something rare in academic papers: They offer specific, practical advice.
“[A]n important takeaway from our study for corporate executives is that communications with investors, and probably other critical
