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The Effect of Conference Calls on Analysts' Forecasts - German Evidence

42 Pages Posted: 13 Oct 2010 Last revised: 8 May 2013

Moritz Bassemir

Goethe University Frankfurt

Zoltán Novotny-Farkas

Lancaster University - Management School

Julian Pachta

Goethe University Frankfurt

Date Written: October 31, 2011

Abstract

This study examines whether conference calls provide additional information to analysts. For a large sample of conference calls, hosted by German firms between 2004 and 2007, our results show that conference calls improve analysts’ ability to forecast future earnings accurately. This suggests that additional information is released during conference calls. The reduction in forecast error is economically significant and larger in magnitude when compared to results for the US (Bowen et al., 2002). These findings are consistent with the notion that commiting to additional disclosures is likely to yield greater effects in a less stringent disclosure system (Verrecchia, 2001). Since the majority of our sample firms conduct conference calls as closed calls, the evidence of this paper suggests that conference calls may contribute to an information gap between call participants and non-invited parties. Our findings should be of substantial interest to European regulators seeking to level the informational playing field for all investors.

Keywords: Analyst Conferences, Conference Calls, Disclosure Regulation, Financial Analysts, Forecast Accuracy, Information Environment

JEL Classification: G14, G15, G18, K22

Suggested Citation

Bassemir, Moritz and Novotny-Farkas, Zoltán and Pachta, Julian, The Effect of Conference Calls on Analysts' Forecasts - German Evidence (October 31, 2011). European Accounting Review, Volume 22, Issue 1, May 2013. Available at SSRN: https://ssrn.com/abstract=1691183

Moritz Bassemir (Contact Author)

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

HOME PAGE: http://www.accounting.uni-frankfurt.de/index.php?id=1072

Zoltán Novotny-Farkas

Lancaster University - Management School ( email )

Bailrigg
Lancaster, LA1 4YX
United Kingdom

Julian Pachta

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

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