Earnings could force CEOs to get political
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CEOs have been keeping their heads down as Election Day nears, but quarterly earnings often require them to come up for air and address investors and the media.
Why it matters: During this quarter's earnings calls and the press interviews that follow, executives could be forced to discuss the election, its outcome and any uncertainty surrounding it.
The big picture: According to a JP Morgan report, traditionally markets are volatile ahead of a presidential election but level out once a candidate has been chosen.
- This year, however, mandatory recounts could delay results, causing a longer stint of indecision that executives on the earnings media circuit might have to address.
Between the lines: The only thing investors dislike more than bad performance is uncertainty, says Alex Jorgensen, head of investor relations at Prosek Partners.
- Because of this, the election has become a consideration in this earnings cycle. "When you factor in what happened last [presidential] election or even two elections ago, just because you have the results of the election, doesn't mean the uncertainty goes away," Jorgensen said.
- "Regardless of when you report earnings, you need to have a prepared suite of communications and talking points for the full range of scenarios that may play out next week," he added.
Zoom in: Companies are not only strategizing about addressing the election results, they also have to consider whether their news will break through the crowded news cycle.
- Reporting on Election Day is not necessarily a pro or a con — it's a reality. So communicators can use this reality to bury the ho-hum or even bad news.
Reality check: Regardless of when earnings are scheduled, a company will have to answer to investors and be prepared to discuss its performance and the impact the election outcome has on the business.
- More U.S. companies are reporting earnings the week of the election and in the week that follows compared to past cycles, according to an Axios analysis.
The intrigue: Troubled companies have a history of reporting earnings around Election Day.
- And this cycle, companies like CVS Health, AMC and Bumble are reporting the day after the election.
What they're saying: "The conversations that I'm having with CEOs and heads of comms are about what happens the day after the election or in the weeks after if there's an unknown outcome," Shallot Communications co-founder Teal Pennebaker told me at the recent Mixing Board Live conference in Austin, Texas.
- "Several are very concerned about what if there's another Jan. 6? What is our role in corporate America when it comes to democracy? Do we take a stance? Is that political? Do we need a democracy to function in order for our company to do well?" she added.
- These are the types of questions executives should prepare for should the era of election uncertainty extend beyond Tuesday.
What to watch: While a few business leaders have come out in support of a particular candidate, for the most part, corporate America has been quite guarded.
- If questions about the election reach a crescendo that affects employees, shareholders or business operations — particularly in swing states — companies may have to respond.
- You'll likely see very diplomatic reactions from executives, most of whom will try to convey to the business media and shareholders that their companies will be able to work with either administration, regardless of the outcome.
More on Axios: Evolution of communicating quarterly earnings
