Casting conference calls

Lauren Cohen, Dong Lou and Christopher Malloy

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We explore a subtle but important mechanism through which firms can control information flow to the markets. We find that firms that “cast” their conference calls by disproportionately calling on bullish analysts tend to underperform in the future. Firms that call on more favorable analysts experience more negative future earnings surprises and more future earnings restatements. A long–short portfolio that exploits this differential firm behavior earns abnormal returns of up to 149 basis points per month or almost 18% per year. We find similar evidence in an international sample of earnings call transcripts from the United Kingdom, Canada, France, and Japan. Firms with higher discretionary accruals, firms that barely meet/exceed earnings expectations, and firms (and their executives) that are about to issue equity, sell shares, and exercise options are all significantly more likely to cast their earnings calls.

Keywords: information; strategic release; firms; conference calls (search for similar items in EconPapers)
JEL-codes: J50 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2020-11-01
New Economics Papers: this item is included in nep-bec
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Published in Management Science, 1, November, 2020, 66(11), pp. 5015 - 5039. ISSN: 0025-1909

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:101136

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