Orders Backlog in Earnings Conference Calls

41 Pages Posted: 8 Jul 2020

See all articles by Ronen Feldman

Ronen Feldman

Bar-Ilan University - Department of Computer Science

Suresh Govindaraj

Rutgers University - Rutgers Business School - Newark and New Brunswick

Joshua Livnat

New York University; Prudential Financial - Quantitative Management Associates

Kate Suslava

Bucknell University Freeman College of Management

Date Written: June 12, 2020

Abstract

Firm disclosure of order backlog (OB) is considered important to assess future sales and profits. The extant literature on OB has generally documented positive associations between increases in OB and market returns. These associations were based on annual disclosures of backlog in 10-K filings, and could have been caused by other simultaneous disclosures that were also correlated with order backlog. To focus on the direct effects of backlog on market participants, we use references to OB in earnings conference call transcripts. We find incremental market reactions to OB after controlling for earnings surprise and other information communicated during the conference call. Our findings also reveal that OB disclosures are more relevant when they are supported by numbers and when firms derive a material amount of their demand from OB.

Keywords: order backlog, conference calls, qualitative disclosures, stock returns

JEL Classification: G14, M41

Suggested Citation

Feldman, Ronen and Govindaraj, Suresh and Livnat, Joshua and Suslava, Kate, Orders Backlog in Earnings Conference Calls (June 12, 2020). NYU Stern School of Business, Available at SSRN: https://ssrn.com/abstract=3625785 or http://dx.doi.org/10.2139/ssrn.3625785

Ronen Feldman

Bar-Ilan University - Department of Computer Science ( email )

Israel

Suresh Govindaraj

Rutgers University - Rutgers Business School - Newark and New Brunswick ( email )

1 Washington Park
Room #934
Newark, NJ 07102
United States

Joshua Livnat

New York University ( email )

44 West 4th Street, Suite 10-76
Stern School of Business
New York, NY 10012-1118
United States
212-998-0022 (Phone)
212-995-4004 (Fax)

Prudential Financial - Quantitative Management Associates ( email )

2 Gateway Center
6th Fl.
Newark, NJ 07102
United States

Kate Suslava (Contact Author)

Bucknell University Freeman College of Management ( email )

701 Moore Ave
Lewisburg, PA 18837
United States

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