Can the Balanced Scorecard Help in Designing Conference Calls? The Effect of Balanced Information Composition on the Cost of Capital

European Accounting Review, Forthcoming

54 Pages Posted: 30 Jan 2020

See all articles by Sebastian Firk

Sebastian Firk

University of Göttingen

Jan Hennig

University of Göttingen

Michael Wolff

University of Göttingen

Date Written: November 4, 2019

Abstract

Most recent studies on conference calls focus on the costs for firms that can arise from the calls’ open nature. We study the benefits of conference calls and hypothesize that firms could use the balanced scorecard concept as a framework for presenting the information (i.e., balanced information composition) in conference calls to lower the cost of capital. Our results show a negative association between a more balanced information composition in conference calls and a firm’s cost of capital. Additional tests substantiate that the effect of such a balanced information composition on the cost of capital is driven by a reduction in information asymmetry. Overall, the findings suggest that firms can benefit from the balanced scorecard concept by using it as a framework for preparing their conference calls.

Keywords: earnings conference calls, cost of capital, balanced scorecard, textual analysis

JEL Classification: G14, L2, M41

Suggested Citation

Firk, Sebastian and Hennig, Jan and Wolff, Michael, Can the Balanced Scorecard Help in Designing Conference Calls? The Effect of Balanced Information Composition on the Cost of Capital (November 4, 2019). European Accounting Review, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3508682 or http://dx.doi.org/10.2139/ssrn.3508682

Sebastian Firk

University of Göttingen ( email )

Platz der Gottinger Sieben 3
Gottingen, D-37073
Germany

Jan Hennig (Contact Author)

University of Göttingen ( email )

Platz der Gottinger Sieben 3
Gottingen, D-37073
Germany

Michael Wolff

University of Göttingen ( email )

Platz der Göttinger Sieben 3
Göttingen, DE 37073
Germany

HOME PAGE: http://www.contolling.uni-goettingen.de

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