The Manager in Communication: The Effect of CEOs on Conference Calls

ABSTRACT We examine whether financial analysts are subject to limited attention. We find that when analysts have another firm in their coverage portfolio announcing earnings on the same day as the sample firm (a “concurrent announcement”), they are less likely to issue timely earnings forecasts for the sample firm's subsequent quarter than analysts without a concurrent announcement. Among the analysts who issue timely earnings forecasts, the thoroughness of their work decreases as their number of concurrent announcements increases. In addition, analysts are more sluggish in providing stock recommendations and less likely to ask questions in earnings conference calls as their number of concurrent announcements increases. Moreover, when analysts face concurrent announcements, they tend to allocate their limited attention to firms that already have rich information environments, leaving behind firms in need of attention. Overall, our evidence suggests that even financial analysts, who serve as information specialists, are subject to limited attention. JEL Classifications: G10; G11; G17; G14. Data Availability: Data are publicly available from the sources identified in the paper.

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What’s really in a deal? Evidence from textual analysis of M&A conference calls

Review of Financial Economics ◽

10.1002/rfe.1126 ◽

2021 ◽

Author(s):

Wenyao Hu ◽

Thomas Shohfi ◽

Runzu Wang

Keyword(s):

Textual Analysis ◽

Conference Calls

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Does litigation change managers’ beliefs about the value of voluntarily disclosing bad news?

Review of Accounting Studies ◽

10.1007/s11142-021-09582-z ◽

2021 ◽

Author(s):

Mary Brooke Billings ◽

Matthew C. Cedergren ◽

Svenja Dube

Keyword(s):

Legal Liability ◽

Good Faith ◽

Bad News ◽

Press Releases ◽

Conference Calls ◽

Consensus Forecasts ◽

Legal Costs

AbstractResearch suggests that earnings-disclosure-related litigation causes managers to reduce subsequent disclosure, perhaps stemming from a belief that even their good faith disclosures will cause them trouble. This paper considers unexplored dimensions of disclosure and alternative channels of disclosure to provide additional evidence that speaks to how litigation shapes managers’ disclosure strategies. Consistent with Skinner (1994)’s classic legal liability hypothesis, we find that, while managers reduce and delay forecasts of positive earnings news following litigation, they increase the frequency and timeliness of their bad news forecasts. Moreover, many managers who were nonguiders prior to facing legal scrutiny begin guiding following litigation. Managers also maintain (if not increase) the information they provide via press releases and during conference calls following litigation. Supporting the notion that managers use disclosure to walk down expectations, additional analyses document an increase in the likelihood that lawsuit firms report earnings that beat consensus forecasts in the post-lawsuit period. Collectively, our evidence suggests that following litigation managers continue to view disclosure as a valuable tool that shapes their firms’ information environments and reduces expected legal costs. In so doing, it supports an important alternative viewpoint of how firms respond to litigation as well as the effectiveness of litigation as a disciplining mechanism.

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