Engagement in earnings conference calls

Kristina M. Rennekamp, Mani Sethuraman and Blake A. Steenhoven

Journal of Accounting and Economics, 2022, vol. 74, issue 1

Abstract: Research on conference calls documents that the question and answer (Q&A) portion is informative to markets. However, prior studies focus on the attributes of the participating individuals, primarily managers and analysts. We instead use the conversation as our unit of analysis, and examine whether conversational engagement between managers and analysts in earnings calls is informative to market participants. Using an experiment, we first demonstrate that linguistic style matching (LSM), a form of verbal coordination, is a reasonable empirical proxy for conversational engagement. We next use a quasi-experiment to confirm that investors can detect differences in engagement. Finally, using a hand-collected archival dataset comprised of audio recordings and textual transcripts from over 2400 earnings calls, we show that LSM in manager-analyst conversations during the Q&A is positively associated with absolute stock returns during the conversation, suggesting that conversations with greater engagement are more informative to capital markets and facilitate price formation.

Keywords: Conference calls; Linguistic style matching; Engagement; Price formation; Market microstructure (search for similar items in EconPapers)
JEL-codes: M40 M41 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:74:y:2022:i:1:s0165410122000210

DOI: 10.1016/j.jacceco.2022.101498

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