Speaking of the Short-term: Disclosure Horizon and Capital Market Outcomes
Boston University - Department of Accounting
University of Southern California
Harvard University - Harvard Business School
Harvard Business School Accounting & Management Unit Working Paper No. 12-072
We study conference calls as a voluntary disclosure channel and create a proxy for the time horizon that senior executives emphasize in their communications. We find that our measure of disclosure time horizon is not only related to the underlying economics of the firm, but also to short-term incentives and capital market pressures. Consistent with the language emphasized during conference calls partially capturing short-termism, we show that it is associated with myopic behavior. Moreover, we show that short-term disclosure horizon predicts lower future accounting and stock price performance. Overall, the results show that the time horizon of conference call narratives can be informative about managers’ myopic behavior.
Number of Pages in PDF File: 67
Keywords: short termism, corporate performance, conference calls, investor base, risk, cost of capital
JEL Classification: G12, G14, G21, M41
Date posted: February 6, 2012 ; Last revised: October 12, 2014
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