Argumentation in Finance

Financial communication activities are permeated by arguments. Managers, IR officers, institutional  investors, analysts and  financial journalists, market regulators and other actors are constantly engaged in strategic discussions regarding a firm’s quarterly performance, the evaluation of an investment opportunity, the credibility of a financial advice or the merits of a trust-destroying accusation. 

All key financial activities and professions involve participating in complex discussions with sound, persuasive and situationally appropriate arguments. Moving from this observation, the course explores the domain of strategic financial communication from the perspective of argumentation studies, addressing the following questions:

• How do actors and institutions in the financial markets strategically construct arguments to support their investment case and favour trust?
• What makes these arguments (in)effective?
• How can these arguments be critically analysed and evaluated?
• How can argumentation support the design of communication strategies that are at the same time persuasive and reasonable and  support sustainable (long-term) trust among market participants?

The course will examine the strategic importance of argumentation in key contexts  of financial communication, including various types of stock market communications (with special attention to quarterly earnings calls), fundraising activities by start-ups and private equity firms, and the complex communications of ownership impacting transactions such as takeovers or spin-offs.  

Students will learn to:

Understand the equity story of a publicly traded firm as a structured set of arguments supporting its long-term viability as an equity investment, linking financial KPIs to the firm’s capabilities and business strategy. They will also learn to critically evaluate this equity story by asking questions and developing counterarguments.

Analyse the questions equity analysts ask during quarterly earnings calls as they assess a listed company’s equity story in light of quarterly results, market conditions, and managerial decisions, and evaluate the quality of management’s answers.

Design a start-up pitch for a venture capital investor as an argument-based investment case through a group role-playing simulation.

Conduct a case study of strategic communication in financial markets, focusing on public controversies such as shareholder proposals, activist campaigns, negative surprises, underperformance, reputational issues, short-seller campaigns, and hostile takeovers. Students will evaluate the cogency and persuasive effectiveness of the arguments and draw practical lessons for corporate investor relations and investors.

Use computer-based methods to visualize argument structures in persuasive messages, explore controversial issues, and record the outcomes of problem-solving and discussions.

Apply the methods of stock issues and common topics, supported by the Argumentum Model of Topics, to identify issue-relevant argumentative patterns in investment decisions, reconstruct implicit reasoning, and evaluate its soundness and effectiveness. 

In presenza

The course includes lectures, discussions of case studies, argumentation analysis exercises, a group activity involving the role playing simulation of a start-up pitch, and an individual case study.

Regular attendance (at least 75% of the course) is highly recommended as the course gradually builds on previously introduced concepts and methods. Classes also include several sessions with hands-on exercises that will be included in the exam. Attendance to in-course activities is mandatory and systematically checked.

To map arguments, an argument visualization software for collaborative analysis (OVA) will be employed: http://ova3.arg.tech/

40% of the grade will be assigned during the course:

• Start-up pitch (10%). The activity requires the full in-person participation of each member to the activity to obtain the group score. 
• Intermediate written test (30%). The test is held during class hours and it will not be possible to repeat the test during exam sessions.

Oral exam (60%). The rest of the grade will be based on a final oral exam consisting of an oral presentation of the case study, followed by questions on the concepts and methods employed.

A detailed syllabus and reading list will be made available via the iCorsi platform at the start of the course.