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
June 12, 2014
We document economically significant indirect costs of providing conference calls — increase in information asymmetry and more negative immediate market reaction — when managers fail to elicit questions during the calls’ question-and-answer (Q&A) session. We establish this result by focusing on earnings calls where managers fetch either zero questions or “too few” questions when they open the floor for questions. We extend the literature on conference calls as an important corporate communication medium by examining hereto unexamined costs, and propose remedies for firms to avoid such indirect costs of corporate communication.
Number of Pages in PDF File: 49
Keywords: conference calls, corporate disclosure, information asymmetry, price penalty
JEL Classification: M41, G12, G14working papers series
Date posted: June 14, 2014 ; Last revised: June 17, 2014
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