Long live the power breakfast: Why executives should schedule critical tasks for early in the day

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Many executives spend significant sums improving their personal performance. However, new research by Elizabeth Demers and her co-authors, suggests that there is one relatively simple, effective and low cost way of upping your game as an executive. They show that, for a combination of reasons, cognitive function, mood and the ability to communicate tend to decline throughout the day. For executives with packed diaries and little time to replenish reserves, it is best to get critical tasks scheduled for the morning.

5 min read

Elizabeth Demers is a professor of Accounting. Her recent research interests include the role of non-financial information in assessing and predicting firm performance.

For many people, business is relentless; 24/7, 365 days a year. Executives rarely get a break from work, whether they are en route to the office, having dinner with stakeholders, or holidaying in the Bahamas. Unlike machines, however, human beings are not designed to be constantly alert. Instead, there is much evidence to support the idea that many human biological processes fluctuate on a 24 hour rhythm – also known as a circadian or diurnal rhythm.

Studies have already shown how the time of day affects the mood of Twitter users and the performance of professionals such as judges and doctors. Now, in the first study of its kind Elizabeth Demers and her co-authors (Jing Chen, School of Management, University at Buffalo; Baruch Lev, Stern School of Business, New York University) investigate how the time of day affects the human biology, emotions, cognitive function, and ultimately the performance, of senior executives and other industry experts.

Depleted resources

The research draws on two lines of research in the fields of psychology and physiology – personal resources theory and the study of the influence of circadian rhythms on human biology and behavior.

Personal resource theory suggests that individuals have a limited reservoir of resources to get them through the day. Task performance leads to diminished resources. Individuals are motivated to protect their personal resources to the extent that the reduction and loss of resources creates tension and stress. Unless these resources are replenished the depletion of resources during the working day leads to poorer performance, a more negative mood, greater hostility, and aggressive interaction and communication. While studies on circadian rhythms also suggest fluctuations in mood, cognitive function, memory and attention, according to the time of day, with a similar potential impact on performance.

To assess the impact of time of day on executive performance the authors analyzed a sample of 18,408 earnings calls made between 08:00 to 15:59 Eastern Time US, during the period January 2001 to June 2007, and relating to 1865 firms publically traded and headquartered in the US. They focused on earnings related calls for a number of reasons:

  • The calls involved senior executives – CEOs and CFOs – and industry experts in the form of analysts.
  • Both executives and analysts tended to be very well prepared for these calls and, therefore, their performance was expected to be near optimal.
  • The calls were made in the US, across similar time zones (Eastern and Central), but at different times throughout the day, allowing an in-depth assessment of the impact of the time of day.

Taking the transcripts of the calls, the authors decoded the three main components of the earnings calls – the management presentation, the analyst questions, and management’s answers – using established linguistic techniques (involving linguistic algorithms), to reveal the overall tone or mood of any passage in a call transcript. In doing so, they were careful to separate out any element of tone or mood that was driven by economic news and fundamentals.

Perfect timing

While the initial management presentation was usually pre-scripted, the unscripted ad-hoc Q&A session that followed was a good testing ground for time-of-the-day related differences in performance. The results showed, on average, a marked decline in mood and tone of conversation for later call times (for both management executives and analysts), attributable to the time of day. Both diminishing personal resources and/or the diurnal effect on human actions and processes appeared to be responsible for the time-of-day-effect. These findings were reinforced following further analysis of calls that also involved West Coast participants.

The authors were able to link the decline in mood and tone of conversations to a negative impact on the organization. This was in the form of temporary mispricing of the shares.

As importantly, the authors were able to link the decline in mood and tone of conversations to a negative impact on the organization. This was in the form of temporary mispricing of the shares. The decline in mood and tone was picked up by the analysts and other market participants on the call, ultimately feeding through to a negative share price impact. Interestingly, as far as the mispricing was concerned, the negativity induced pricing change eventually corrected once the market realized that it was driven by a reaction to human mood rather than a response to economic fundamentals.

The authors are also confident that the potential negative effect of taking decisions and actions at inopportune times of the day is likely to extend beyond the setting of earnings calls and any subsequent effect on share prices. As they note in their paper, their findings suggest the potential for: “a much more pervasive phenomenon of the time of day influencing corporate communication, decision making, and performance at all hierarchical levels and across diverse business enterprises”.

Executive performance deteriorates later in the day

In other words, executive performance deteriorates later in the day, which is likely to manifest in an adverse effect on a range of activities. And in these cases, unlike the share mispricing, any damage done by less than optimal decisions or actions taken by management may be more permanent.

For anyone engaging in important work activities, especially those that involve mental alertness, skillful communications, or difficult decision-making, there is a simple message: make sure those activities are scheduled early in the day.


Related research paper: Elizabeth Demers, Baruch Lev, and Jing Chen, 2018, “Oh What a Beautiful Morning! Diurnal Variations in Economic Agents’ Behavior: Evidence from Conference Calls”, Management Science, forthcoming.


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