Abstract

http://ssrn.com/abstract=2449341
 


 



The Price of Silence: When No One Asks Questions During Conference Calls


Shuping Chen


University of Texas at Austin - Red McCombs School of Business

Stephan Hollander


Tilburg University - Tilburg School of Economics and Management

Kelvin Law


Tilburg University

January 9, 2015


Abstract:     
We document unintended consequences – a temporarily higher bid-ask spread and a negative immediate stock price reaction – of providing conference calls when managers fail to elicit questions during the call’s question-and-answer (Q&A) session. Ceteris paribus, in comparison to a propensity score matched control group, the increase in bid-ask spread is 13% higher and next-day abnormal returns are 80 basis points lower (equivalent to $5-$6 million per call) for zero-question calls. Similar results hold using two alternative identification strategies: using a firm’s own history as its control and an instrumental variable approach. Our results further extend to conference calls in which the number of questions raised falls far below expectations. This study has important implications for managers in improving their investor relations programs post-Regulation Fair Disclosure.

Number of Pages in PDF File: 60

Keywords: conference calls, interactive communication, information asymmetry, investor relations

JEL Classification: M41, G12, G14

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Date posted: June 14, 2014 ; Last revised: January 10, 2015

Suggested Citation

Chen, Shuping and Hollander, Stephan and Law, Kelvin, The Price of Silence: When No One Asks Questions During Conference Calls (January 9, 2015). Available at SSRN: http://ssrn.com/abstract=2449341 or http://dx.doi.org/10.2139/ssrn.2449341

Contact Information

Shuping Chen (Contact Author)
University of Texas at Austin - Red McCombs School of Business ( email )
Austin, TX 78712
United States
521.471.5328 (Phone)
Stephan Hollander
Tilburg University - Tilburg School of Economics and Management ( email )
P.O. Box 90153
Tilburg, DC 5000 LE
Netherlands
+31 13 466 8288 (Phone)
+31 13 466 8001 (Fax)
HOME PAGE: http://www.uvt.nl/people/s.hollander
Kelvin Law
Tilburg University ( email )
P.O. Box 90153
Tilburg, 5000 LE
Netherlands
HOME PAGE: http://sites.google.com/site/kelvinlaw2012
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