How to Talk Down Your Stock Returns

30 Pages Posted: 8 Mar 2019 Last revised: 6 Aug 2019

See all articles by Andreas Barth

Andreas Barth

Goethe University Frankfurt - Department of Finance

Sasan Mansouri

Goethe University Frankfurt - Department of Finance

Fabian Woebbeking

Goethe University Frankfurt - Department of Finance

Severin Zörgiebel

Goethe University Frankfurt

Date Written: July 30, 2019

Abstract

We analyze how senior managements' willingness to orally convey information in earnings calls affects firms' stock returns. Using a novel "Blathering" metric for managements’ unwillingness to share precise information by ‘beating around the bush’, we show that market participants perceive imprecise information as bad news. Firms experience significantly lower cumulative abnormal returns following their earnings calls when managers blather more. This finding cannot be explained by time-constant firm characteristics or management style. Further, we investigate the motives behind blathering and observe that blathering is particularly pronounced when earnings management is more likely, when analysts' questions are tougher, and when last quarters' return on equity was poor.

Keywords: conference calls, management blathering, corporate disclosure, stock returns

JEL Classification: D82, G12, G14, G30

Suggested Citation

Barth, Andreas and Mansouri, Sasan and Woebbeking, Fabian and Zörgiebel, Severin, How to Talk Down Your Stock Returns (July 30, 2019). Available at SSRN: https://ssrn.com/abstract=3336671 or http://dx.doi.org/10.2139/ssrn.3336671

Andreas Barth

Goethe University Frankfurt - Department of Finance ( email )

Theodor-W.-Adorno-Platz 3
Frankfurt, 60629
Germany

Sasan Mansouri

Goethe University Frankfurt - Department of Finance ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany
+49(0)6979833727 (Phone)

HOME PAGE: http://www.sasanm.ir

Fabian Woebbeking (Contact Author)

Goethe University Frankfurt - Department of Finance ( email )

Theodor-W.-Adorno-Platz 3
Frankfurt, 60323
Germany
+49 (69) 798 33731 (Phone)

Severin Zörgiebel

Goethe University Frankfurt ( email )

Theodor-W.-Adorno-Platz 3
Frankfurt am Main, 60323
Germany

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