Who Listens to Corporate Conference Calls? The Effect of 'Soft Information' on Institutional Trading

77 Pages Posted: 19 Nov 2020 Last revised: 21 Mar 2024

See all articles by Alan Guoming Huang

Alan Guoming Huang

University of Waterloo

Russ Wermers

University of Maryland - Robert H. Smith School of Business; European Corporate Governance Institute (ECGI)

Date Written: March 10, 2024

Abstract

Corporate conference calls provide a public venue through which analysts directly interact with management to discuss a company’s prospects. Using a comprehensive database of transcribed corporate conference calls, we find that institutional investors trade in response to the “tone” (soft information) expressed in calls. Notably, institutions exercise prudence when reacting to soft information through “slow” trading. Specifically, institutional trading is related to the degree of information revelation during calls and to subsequent analyst recommendation revisions related to calls. Our results suggest that conference calls facilitate price discovery through shaping a firm’s information environment and through subsequent (sometimes slow) institutional trading.

Keywords: conference calls; institutional holdings; sentiment analysis

JEL Classification: G23; G12

Suggested Citation

Huang, Alan G. and Wermers, Russell R., Who Listens to Corporate Conference Calls? The Effect of 'Soft Information' on Institutional Trading (March 10, 2024). Available at SSRN: https://ssrn.com/abstract=3723841 or http://dx.doi.org/10.2139/ssrn.3723841

Alan G. Huang (Contact Author)

University of Waterloo ( email )

School of Accounting and Finance
Waterloo, Ontario N2L 3G1
Canada
519-888 4567 ext. 36770 (Phone)

Russell R. Wermers

University of Maryland - Robert H. Smith School of Business ( email )

Department of Finance
College Park, MD 20742-1815
United States
301-405-0572 (Phone)
301-405-0359 (Fax)

HOME PAGE: http://terpconnect.umd.edu/~wermers/

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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