Words versus Deeds: Evidence from Post-Call Manager Trades

Financial Management, Vol. 46, No. 4, pp. 965-994, 2017.

51 Pages Posted: 14 Jan 2013 Last revised: 8 Nov 2017

See all articles by Paul Brockman

Paul Brockman

Lehigh University - College of Business

Jim Cicon

University of Central Missouri

Xu Li

The University of Hong Kong

S. McKay Price

Lehigh University - Perella Department of Finance

Date Written: January 31, 2017

Abstract

We examine the impact of conference call tones on the direction and magnitude of subsequent manager trades. Our univariate results show that corporate insiders buy company shares following negative-tone conference calls, and sell shares following positive-tone conference calls. This inverse call tone-trading pattern holds for both managers’ introductory sessions and subsequent question and answer (Q&A) sessions. Our multivariate results confirm the univariate call tone-trading patterns and show that contrarian manager trades are mostly driven by managerial selling activity. In contrast to the consistent and strong evidence of managers trading in the opposite direction of their call tones, we find no evidence of managers trading in the same direction of their call tones. We also examine the impact of analyst Q&A challenges on post-call manager trades. Our findings suggest that managers learn from analyst feedback and adjust their post-call trades accordingly.

Keywords: Conference calls, Textual analysis, Disclosure, Analysts, Insider Trading

JEL Classification: G02, G14, M14

Suggested Citation

Brockman, Paul and Cicon, James and Li, Xu and Price, S. McKay, Words versus Deeds: Evidence from Post-Call Manager Trades (January 31, 2017). Financial Management, Vol. 46, No. 4, pp. 965-994, 2017.. Available at SSRN: https://ssrn.com/abstract=2200639 or http://dx.doi.org/10.2139/ssrn.2200639

Paul Brockman

Lehigh University - College of Business ( email )

Bethlehem, PA 18015
United States

James Cicon

University of Central Missouri ( email )

Warrensburg, MO 64093-5070
United States

Xu Li

The University of Hong Kong ( email )

Pokfulam Road
Hong Kong, Pokfulam HK
China

S. McKay Price (Contact Author)

Lehigh University - Perella Department of Finance ( email )

621 Taylor Street
Bethlehem, PA 18015
United States
610-758-4787 (Phone)

HOME PAGE: http://www.mckayprice.com

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