Casting Conference Calls

Lauren Cohen (), Dong Lou () and Christopher J. Malloy ()
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Lauren Cohen: Harvard Business School, Boston, Massachusetts 02163; National Bureau of Economic Research, Cambridge, Massachusetts 02138;
Dong Lou: London School of Economics and Centre for Economic Policy Research, London WC2A 2AE, United Kingdom
Christopher J. Malloy: Harvard Business School, Boston, Massachusetts 02163; National Bureau of Economic Research, Cambridge, Massachusetts 02138;

Management Science, 2020, vol. 66, issue 11, 5015-5039

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)
Date: 2020
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Citations: View citations in EconPapers (15)

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