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From modesty to market: shareholder reactions to humility rhetoric in family and nonfamily firms under media scrutiny

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Paul Sanchez
Paul Sanchez
Paul Sanchez
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Robert J. Pidduck at Old Dominion University
Robert J. Pidduck
Duygu Phillips at University of Delaware
Duygu Phillips
Joshua J. Daspit at Texas State University
Joshua J. Daspit
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Abstract and Figures

Family firms are typically associated with a respected system of values, yet the impact of such values on shareholder reactions remains to be understood. We examine the presence of humility rhetoric in corporate communications, characterized by language emphasizing modesty and collaboration, and its effect on shareholder reactions for both family and nonfamily firms. Analyzing 2250 shareholder letters from S&P 500 family and nonfamily firms and 1460 shareholder letters from small and medium-sized family and nonfamily firms, this study finds strong evidence supporting the positive impact of humility rhetoric on shareholder reactions for family firms. Further, interesting effects emerge when considering the influence of positive and negative media coverage. We bolster these findings with a sample of small and medium-sized family and nonfamily businesses and find consistent results. Our findings help advance the economic theory of family firms by highlighting the capital market implications of humility rhetoric in these firms and its importance in shaping positive shareholder reactions. Further, from a methodological perspective, this study introduces a measure of humility rhetoric using a computer-aided text-analysis approach, extending its applicability to broader research contexts.
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Small Bus Econ (2024) 63:755–780
https://doi.org/10.1007/s11187-024-00878-3
RESEARCH ARTICLE
From modesty tomarket: shareholder reactions tohumility
rhetoric infamily andnonfamily firms undermedia
scrutiny
PaulSanchez · RobertJ.Pidduck · DuyguPhillips ·
JoshuaJ.Daspit · DanielT.Holt
Accepted: 9 January 2024 / Published online: 5 February 2024
© The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature 2024
Abstract Family firms are typically associated with
a respected system of values, yet the impact of such
values on shareholder reactions remains to be under-
stood. We examine the presence of humility rhetoric
in corporate communications, characterized by lan-
guage emphasizing modesty and collaboration, and
its effect on shareholder reactions for both family and
nonfamily firms. Analyzing 2250 shareholder letters
from S&P 500 family and nonfamily firms and 1460
shareholder letters from small and medium-sized
family and nonfamily firms, this study finds strong
evidence supporting the positive impact of humility
rhetoric on shareholder reactions for family firms.
Further, interesting effects emerge when considering
the influence of positive and negative media cover-
age. We bolster these findings with a sample of small
and medium-sized family and nonfamily businesses
and find consistent results. Our findings help advance
the economic theory of family firms by highlighting
the capital market implications of humility rhetoric
in these firms and its importance in shaping positive
shareholder reactions. Further, from a methodologi-
cal perspective, this study introduces a measure of
humility rhetoric using a computer-aided text-anal-
ysis approach, extending its applicability to broader
research contexts.
Plain English Summary Family firms and non-
family firms are evaluated differently by sharehold-
ers based on various values, one of which is the level
of humility exhibited in corporate communications.
“Humility is not thinking less of yourself, it’s thinking of
yourself less” – C.S. Lewis.
Supplementary Information The online version
contains supplementary material available at https:// doi.
org/ 10. 1007/ s11187- 024- 00878-3.
P.Sanchez(*)
Department ofManagement & Entrepreneurship, Ivy
College ofBusiness, Iowa State University, 2340 Gerdin
Business Building, 2167 Union Drive, Ames, IA50011,
USA
e-mail: psanch26@iastate.edu
R.J.Pidduck
Department ofManagement, Strome School ofBusiness,
Old Dominion University, Norfolk, USA
e-mail: rpidduck@odu.edu
D.Phillips
Department ofBusiness Administration, University
ofDelaware, Newark, USA
e-mail: duygu@udel.edu
J.J.Daspit
Department ofManagement, McCoy College ofBusiness,
Texas State University, SanMarcos, USA
e-mail: josh.daspit@txstate.edu
D.T.Holt
Department ofManagement & Entrepreneurship, College
ofBusiness, Louisville University, Louisville, USA
Content courtesy of Springer Nature, terms of use apply. Rights reserved.
... Humble leadership refers to a leadership style characterized by a leader's self-awareness, openness to feedback, and recognition of others' contributions. It involves acknowledging one's limitations and being receptive to new ideas and diverse viewpoints (Lim, 2024, Sanchez et. al., 2024. Zhang, Javaid, Liao, Choi and Kim in (2024) suggest that humility can be divided into five subdimensions: honesty, fairness, generosity, respect, and freedom from arrogance. Salehzadeh and Ziaeian in (2024) argue that humility is different from low self-esteem in that it is a personal orientation based on an accurate understanding of o ...
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... When we examine these questions in the context of the papers published in this special issue, we find the following insights. Stommel et al. (2024) and Sanchez et al. (2024) provide nuance to the understanding of why family firms exist alongside nonfamily firms. Stommel et al.'s study suggests that family firms will be able to pursue a broader set of opportunities than nonfamily firms because their reference points are lower and more opportunities will be perceived as favorable. ...
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