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
Date Written: November 4, 2019
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: Suggested Citation