Conference Calls and Information Asymmetry

36 Pages Posted: 5 Feb 2003

See all articles by Stephen Brown

Stephen Brown

University of Maryland - Department of Accounting & Information Assurance

Stephen A. Hillegeist

Arizona State University (ASU) - W. P. Carey School of Business, School of Accountancy

Kin Lo

University of British Columbia (UBC) - Sauder School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: August 2003

Abstract

We hypothesize that conference calls are voluntary disclosures that lead to long-term reductions in information asymmetry among equity investors. Cross-sectional and time-series tests show that the level of information asymmetry is negatively associated with conference call activity. We find that firms initiating a policy of holding periodic conference calls experience a sustained reduction in information asymmetry (although one-time callers experience no significant decline in asymmetry). Since prior work has shown that the cost of equity capital is increasing with information asymmetry, our results suggest that firms that hold conference calls more frequently have lower costs of capital.

Note: Previously titled "Voluntary Disclosure Frequency and Information Asymmetry"

Keywords: information asymmetry, voluntary disclosures, conference calls, microstructure, regulation

JEL Classification: D82, G10, M41, M45

Suggested Citation

Brown, Stephen and Hillegeist, Stephen A. and Lo, Kin, Conference Calls and Information Asymmetry (August 2003). Sauder School of Business Working Paper. Available at SSRN: https://ssrn.com/abstract=363040 or http://dx.doi.org/10.2139/ssrn.363040

Stephen Brown

University of Maryland - Department of Accounting & Information Assurance ( email )

Robert H. Smith School of Business
College Park, MD 20742-9157
United States

Stephen A. Hillegeist (Contact Author)

Arizona State University (ASU) - W. P. Carey School of Business, School of Accountancy ( email )

Tempe, AZ 85287-3706
United States
480-965-6614 (Phone)

Kin Lo

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada
604-822-8430 (Phone)
604-822-9470 (Fax)

HOME PAGE: http://www.sauder.ubc.ca/Faculty/People/Faculty_Members/Lo_Kin

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