Analysts’ and Managers’ Use of Humor on Public Earnings Conference Calls

Abstract

We examine analysts’ and managers’ use of humor during public earnings conference calls. Using a sample of 89,573 conference calls from 2003-2016, we find that experienced analysts and analysts with positive views of the company are more likely than other analysts to use humor on conference calls. We also find that analysts tend to use humor when the tone of their question is unusually negative, and that analysts who use humor on conference calls are allowed to speak for a longer period of time and receive longer responses from managers. When managers use humor, abnormal returns surrounding the call are higher, analysts’ stock recommendation revisions following the call are more positive, and the tone of media coverage of the firm is more favorable. Our study provides new evidence on the use of humor in corporate disclosure events, and our findings indicate that humor has economically meaningful implications for public earnings conference calls.

Keywords: earnings conference calls, analysts, earnings, management, financial analysts, disclosure, humor

JEL Classification: G02, G20, G24, G29, D22, M40, M41