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Engagement in earnings conference calls

Author

Listed:
  • Rennekamp, Kristina M.
  • Sethuraman, Mani
  • Steenhoven, Blake A.

Abstract

Research on conference calls documents that the question and answer (Q&A) portion is informative to markets. However, prior studies focus on the attributes of the participating individuals, primarily managers and analysts. We instead use the conversation as our unit of analysis, and examine whether conversational engagement between managers and analysts in earnings calls is informative to market participants. Using an experiment, we first demonstrate that linguistic style matching (LSM), a form of verbal coordination, is a reasonable empirical proxy for conversational engagement. We next use a quasi-experiment to confirm that investors can detect differences in engagement. Finally, using a hand-collected archival dataset comprised of audio recordings and textual transcripts from over 2400 earnings calls, we show that LSM in manager-analyst conversations during the Q&A is positively associated with absolute stock returns during the conversation, suggesting that conversations with greater engagement are more informative to capital markets and facilitate price formation.

Suggested Citation

  • Rennekamp, Kristina M. & Sethuraman, Mani & Steenhoven, Blake A., 2022. "Engagement in earnings conference calls," Journal of Accounting and Economics, Elsevier, vol. 74(1).
    • Handle: RePEc:eee:jaecon:v:74:y:2022:i:1:s0165410122000210
    DOI: 10.1016/j.jacceco.2022.101498
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    References listed on IDEAS

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    More about this item

    Keywords

    Conference calls; Linguistic style matching; Engagement; Price formation; Market microstructure;
    All these keywords.

    JEL classification:

    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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