Post by Duke University - The Fuqua School of Business

"CEOs employ strategic ambiguity, because once you make a promise, you’re kind of locked into that course." New research from Prof Bill Mayew used LLMs to analyze a decade of earnings calls, revealing how CEO promises function as communication tools—and why leaders become more cautious when uncertainty rises. Key insights: • CEO "promises" are public commitments that shape expectations and constrain future decisions. • Leaders rely more on promises when they need credibility, such as early in their tenure or after disappointing results. • In uncertain environments, CEOs shift toward vaguer, longer-term promises to preserve flexibility. • The average promise horizon is ~11.5 months, but topics like sustainability stretch much longer. • Broken promises carry real consequences—each unmet commitment raises the likelihood of CEO dismissal. When it comes to AI, Mayew said leaders are deliberately vague about the returns on current investments. “CEOs will give their near-term data center investment plans in detail but aren’t going to promise you what the payout is going to be or when." #Leadership #Strategy #CorporateGovernance #EarningsCalls #AI #LLM #DecisionMaking #Accounting