The Price of Silence: When No One Asks Questions During Conference Calls
University of Texas at Austin - Red McCombs School of Business
Tilburg University - Tilburg School of Economics and Management
February 13, 2015
The absence of information acquisition activity in live conference calls can cause market frictions and have adverse economic consequences. When no one asks questions during a conference call’s Q&A session, firms experience a 13% higher increase in bid-ask spread and their next-day abnormal returns are 72 basis points lower ($5.4-5.9 million per call) compared to a propensity score matched control group. Our results extend to conference calls where the number of questions raised falls far below expectations, and hold across three identification strategies. This study complements recent work in finance by showing that absence of information acquisition activity by (or on behalf of) investors, in addition to absence of managerial disclosures, contains information and has important implications for managers in improving their investor relations programs.
Number of Pages in PDF File: 61
Keywords: Conference calls, market frictions, information asymmetry, investor relations
JEL Classification: M41, G12, G14
Date posted: June 14, 2014 ; Last revised: April 8, 2015
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