Managerial Disclosure vs. Analyst Inquiry: An Empirical Investigation of the Presentation and Discussion Portions of Earnings-Related Conference Calls

Abstract

Using a sample of over 10,000 earnings-related conference call transcripts, we examine the determinants of within-firm variation in the length of managers' presentation and analyst discussion periods during earnings-related conference calls. We find that managers' presentations are longer when reporting poor performance and when earnings are a potentially downward-biased signal of future performance. This result contrasts with prior studies that generally find firms disclose more when performance is good, which is likely due to 1) the fact that the choice to host a conference call is a policy choice that is not easily changed and 2) analysts' direct involvement in the call temper managers' incentives to expound on good performance. We also find that analyst discussion periods are longer when market performance is poor, suggesting that the non-earnings related information disclosed in the presentation is insufficient for analysts' information needs. Finally, we find that longer calls are associated with larger price reactions, larger trading volume, larger analyst forecast revisions and improvements in analysts' forecast accuracy - indicating longer calls are more informative to the market.

Keywords: conference calls, voluntary disclosure, financial analysts

JEL Classification: M41, M45, G29, G12