Schulich Research Shows CEO Promises Boost Investor Confidence but Limit Strategic Flexibility
New research from Schulich reveals that CEO promises can strengthen investor confidence – but may reduce a company’s ability to adapt in changing conditions.
Published in the Strategic Management Journal, the study, “Shaping expectations, losing flexibility: A study of CEO promises as strategic communication tools,” explores how CEOs use public commitments to influence markets and stakeholders. The research is co-authored by Majid Majzoubi, Assistant Professor of Strategic Management at Schulich, with Alex Murray (Lundquist College of Business) and William J. Mayew (Fuqua School of Business).
The study introduces a new framework showing that CEO promises are powerful but risky strategic tools.
“CEO promises are not just words – they’re commitments that shape how investors, analysts and stakeholders evaluate a firm’s future,” said Professor Majzoubi. “Our research shows that while these promises can build confidence and momentum, they also bind organizations to a specific path, making it harder to adapt when conditions change.”
Using advanced Large Language Models (LLMs), researchers analyzed more than 69,000 earnings call transcripts from S&P 1500 firms between 2010 and 2022, identifying over 74,000 CEO promises – the first large-scale dataset of its kind.
The findings reveal that CEOs often make promises to build credibility, particularly early in their tenure, after missing targets, or under scrutiny. However, in uncertain environments, they shift toward more flexible communication strategies.
“In periods of uncertainty, CEOs don’t necessarily stop communicating about the future,” said Prof. Majzoubi. “Instead, they adjust how they communicate – making promises that are broader, less specific, and tied to longer time horizons. This allows them to manage expectations while preserving room to manoeuvre.”
This approach, described as “strategic ambiguity,” helps leaders balance transparency with adaptability.
The study also finds that failing to deliver on public commitments can have serious consequences, including reputational damage and increased likelihood of CEO dismissal.
“A promise creates a kind of ‘strategic debt,’” added Prof. Majzoubi. “Once it’s out there, stakeholders expect it to be fulfilled. If it isn’t, the reputational costs can be substantial – not just for the firm, but for the CEO personally.”
The research highlights the growing role of AI in business scholarship and offers practical insights for leaders. While CEO promises can shape expectations and attract investment, they must be used carefully – especially in volatile conditions.
“Effective leadership communication isn’t just about inspiring confidence – it’s about calibrating commitments,” said Prof. Majzoubi. “The most effective CEOs understand when to make clear promises and when to leave space for adaptation.”
