How informative is question-and-answer similarity to financial analysts? Evidence from Chinese earnings communication conferences

Qigui Liu, Wenqiang Chi and Junyi Wang

Economic Modelling, 2024, vol. 135, issue C

Abstract: Reducing the information asymmetry between managers and external investors is a fundamental issue in economics and finance. By allowing investors to communicate directly with managers, earnings communication conferences (ECCs) have become an important way to deliver information to the market. The existing literature focuses on the answer content of ECCs in the United States. However, the information value of question-and-answer (Q&A) similarity has been ignored. Based on 48,085 firm-analyst-year observations for 2008–2019, we examine the informativeness of Q&A similarity in ECCs to analysts. Specifically, Q&A similarity improves forecast accuracy and reduces optimism bias through the information content and analysts’ site visit channels. Information value is more pronounced in firms with weaker governance and analysts with better industry specialty. Overall, we provide evidence that regulators should take action to improve communication quality in ECCs.

Keywords: Question-and-answer similarity; Earnings communication conferences; Information value; Analysts' forecasts; Machine learning (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:135:y:2024:i:c:s0264999324000567

DOI: 10.1016/j.econmod.2024.106700

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