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

Abstract

Despite the prevalence and importance of humor in interpersonal communication, the disclosure literature is silent on the use of humor in the context of corporate communications. We examine analysts’ and managers’ use of humor during public earnings conference calls. Using a sample of nearly 90,000 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 who use humor on conference calls are allowed to speak for a longer period of time and receive longer responses from managers, and that analysts tend to use humor when the tone of their question is unusually negative. When managers use humor, analysts’ stock recommendation revisions following the call are more positive, and the tone of the company’s media coverage is more favorable. Our study provides new evidence on the use of humor in corporate disclosure events, and our findings indicate that humor has a meaningful influence on the outcomes of public earnings conference calls.

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

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