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

72 Pages Posted: 19 Nov 2020 Last revised: 28 Nov 2022

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: October 31, 2020

Abstract

Conference calls provide a public venue through which stock analysts simultaneously interact, in large numbers, with firm management. Using a comprehensive database of transcribed U.S. corporate conference calls, we find that institutional investors trade immediately and throughout the quarter in response to the “tone” (expressed sentiment) of calls. Institutional trading is especially related to the degree of information revealed during the calls; call information revelation drives subsequent analyst recommendation changes, further contributing to prolonged post-call institutional trading. Our results suggest that conference calls facilitate price discovery as an important conduit that shapes a stock’s information environment and motivates 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 (October 31, 2020). 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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