Managers’ Use of Humor on Public Earnings Conference Calls

49 Pages Posted: 25 Jul 2019 Last revised: 20 Apr 2022

See all articles by Andrew C. Call

Andrew C. Call

Arizona State University (ASU) - School of Accountancy

Rachel W. Flam

London Business School

Joshua A. Lee

Brigham Young University

Nathan Y. Sharp

Texas A&M University - Department of Accounting

Date Written: April 2022

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 communication. Using a sophisticated machine learning algorithm, we identify managers’ successful uses of humor during public earnings conference calls. When managers use humor on an earnings call, stock market returns and analyst forecast revisions following the call are more positive, primarily because of a muted response to negative earnings news. Consistent with managers’ use of humor being a favorable signal of future firm performance, we find no evidence of a returns reversal over the subsequent quarter, and managers’ use of humor predicts more favorable news at the subsequent quarter’s earnings announcement. Our study provides new evidence on the use of humor in corporate disclosure events, and our findings indicate that humor can have a meaningful influence on the market response to public earnings conference calls.

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

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

Suggested Citation

Call, Andrew C. and Flam, Rachel and Lee, Joshua A. and Sharp, Nathan Y., Managers’ Use of Humor on Public Earnings Conference Calls (April 2022). Available at SSRN: https://ssrn.com/abstract=3425509 or http://dx.doi.org/10.2139/ssrn.3425509

Andrew C. Call

Arizona State University (ASU) - School of Accountancy ( email )

Tempe, AZ 85287
United States

Rachel Flam

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

Joshua A. Lee

Brigham Young University ( email )

United States
801-422-3154 (Phone)

HOME PAGE: http://https://marriottschool.byu.edu/directory/details?id=37414

Nathan Y. Sharp (Contact Author)

Texas A&M University - Department of Accounting ( email )

4353 TAMU
College Station, TX 77843-4353
United States
979-845-0338 (Phone)

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