Hiding or Helping? Determinants and Consequences of the Timing of Earnings Conference Calls

Abstract

Open conference calls reveal important information because of their forward-looking discussion, interactive nature, and easy accessibility. Using Bloomberg data, we investigate why firms hold earnings conference calls at different times of the day and how the stock market interprets and reacts to firms’ timing choices. We measure retrospective and prospective news in earnings calls using earnings surprises and the tone of forward-looking statements. We find that firms with more extreme news (both good and bad) tend to hold calls outside trading hours, especially in the evening. To test whether the market understands the information embedded in call “timing,” we conduct an event study around the date when firms schedule the calls. We find higher trading volume when the market is notified of an upcoming switch from trading hours to outside them. Our results suggest that firms strategically time conference calls and that investors infer some information from their timing switches.

Keywords: Information asymmetry, litigation risk, market liquidity

JEL Classification: G14, K22, M41