Let’s double-click on the jargon execs use in earnings calls
Let’s double-click on the jargon execs use in earnings calls
If you are a publicly traded company in the United States, the Securities and Exchange Commission requires that you file a report every quarter detailing your financial situation. Before filing with the SEC, companies generally issue an earnings release and hold what’s known as an earnings call, where executives talk about those results and answer questions from analysts.
These calls are often pretty dry, using industry terminology. But sometimes there’s a word or two that stands out, in part, because it’s used differently than in everyday conversation.
For example, one word that pops up a lot on retailers’ earnings calls is “shrink” used as a noun. As in, “Shrink’s pretty much hit a plateau” (Ollie’s Bargain Outlet); “We’re pleased with the progress we’re making on shrink” (Target); and “Shrink is a constant battle. It’s work every day” (Dollar General).
Shrink is the retail industry term for inventory that’s lost due to error or theft. So, why don’t they just say that instead?
“Shrink is just shorter, right? It’s more efficient,” said Kate Suslava, an accounting professor at Bucknell University who studies earnings calls.
“Shrink” just sounds nicer, Suslava also said. As a euphemism, it makes something that’s bad for business sound not so bad.
“Theft — it definitely kind of hurts your hearing, right? Your ear is like ‘Oh, that’s not a pleasant word,’” she said.
These words are also a kind of shorthand — like another phrase that’s cropped up on earnings calls in the past year: double-click. Instead of taking the time to say, “Let me provide you with more information on this one specific thing,” executives will say “Let’s double-click on this,” using the practical language of technology as a way to discuss business, Suslava said.
“It’s just fashionable, I think, to talk like this. It’s sleek,” she laughed.
This kind of repurposing of words is pretty common, according to sociolinguist Valerie Fridland, a professor at the University of Nevada, Reno.
“Mostly because we have unmet needs in terms of either the sentiments that we want to capture or the vibes we want to give off, or simply the thing we want to describe,” she said.
Fridland wrote a book called “Like, Literally, Dude: Arguing for the Good in Bad English.” One reason these kinds of words spread, she said, is because we pick up new ways of speaking from other people.
“When we talk to each other — even strangers — we actually start to talk more alike. We mirror each other,” Fridland said.
And in the aspirational business world, people are more likely to imitate those who’ve made it. You can track this in the spread of the phrase “economic moat.”
“The concept was, in some ways, coined by Warren Buffett. I don’t know if that’s exactly true, but he was the one who famously used it very frequently,” said Karen Woody, who studies securities law as a professor at Washington and Lee University.
Billionaire investor Warren Buffett has been using “moat” for decades. (See his letter to shareholders from the late 1980s.) Woody said it refers to a company’s competitive advantage, keeping rivals at a distance.
“We’re sort of protecting the company in the way that we would have a castle in medieval times,” she said. “People hear that term, and I think they think of Warren Buffett, and know exactly what he means, and probably repeat that phrase often.”
That’s why you might hear it on an earnings call, where the decision of what words to use is very deliberate. They signal to investors how the company’s doing and can affect the stock price.
“There will be some discussion around, ‘What is the narrative?’” said corporate communications consultant Anne-Taylor Adams.
Once executives agree on a word that fits that narrative, they’re likely to repeat it over and over again.
“When you land on a message, that’s one of the ways that it gets into the ether, is the more times that you say it, the more people just sort of absorb it, and it becomes true,” said Adams.
Executives also sometimes drive home a message with a little mild profanity, as in, “It was a damn good year.”
“It adds emotional aspect. It’s not just reporting the results, but you want to emphasize something,” said accounting professor Suslava of Bucknell.
People swear when they’re frustrated or when they want their audience to pay extra attention, sociolinguist Fridland said.
So, that’s one way executives use words that mean exactly what you think they do.
Stories You Might Like
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
