Product Market Competition, Disclosure Framing, and Casting in Earnings Conference Calls

59 Pages Posted: 23 Mar 2020 Last revised: 22 Mar 2021

See all articles by Kristian D. Allee

Kristian D. Allee

University of Arkansas - Department of Accounting

Chuong Do

University of Nevada, Reno

Mikhail Sterin

Texas State University

Date Written: March 19, 2021

Abstract

An extensive stream of literature investigates how product market competition, by increasing the proprietary costs of disclosure, influences corporate disclosure policy. We hypothesize that the proprietary costs incurred by firms are associated with how a disclosure is framed and structured. We predict and find that the intensity of competition in the product market is associated with more negative and uncertain earnings conference calls. We also find evidence of firms “casting calls” by emphasizing more pessimistic analysts’ questions. Our results are robust to matched analyses on cash flow uncertainty and to examining the casting of analysts, as opposed to their questions, on the earnings call. Finally, we find consistent results using alternative measures of linguistic structure and in an alternative channel of disclosure with an alternative measure of linguistic framing. Our results demonstrate that firms attempt to mitigate proprietary costs by managing discretionary disclosure structure and framing their conference calls.

Keywords: product market competition; proprietary costs; disclosure framing; conference calls.

JEL Classification: G14, M40, M41, M48

Suggested Citation

Allee, Kristian D. and Do, Chuong and Sterin, Mikhail, Product Market Competition, Disclosure Framing, and Casting in Earnings Conference Calls (March 19, 2021). Journal of Accounting & Economics (JAE), Forthcoming, Available at SSRN: https://ssrn.com/abstract=3544328 or http://dx.doi.org/10.2139/ssrn.3544328

Kristian D. Allee (Contact Author)

University of Arkansas - Department of Accounting ( email )

University of Arkansas
Business Building 458
Fayetteville, AR 72701
United States
479-575-5227 (Phone)

Chuong Do

University of Nevada, Reno ( email )

1664 N. Virginia St
Reno, NV 89557
United States

Mikhail Sterin

Texas State University ( email )

TX
United States

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