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
Date Written: January 31, 2017
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: Suggested Citation