Managers’ staging of earnings conference calls around actual share repurchases

We use earnings call transcripts to examine whether managers strategically change their disclosure behaviors before an actual share repurchase. Our findings suggest that managers use tone management to strategically portray a more negative outlook for the firm in the earnings call before an actual repurchase. In addition, we find that managers of repurchasing firms “cast” the call with more unfavorable analysts even when more favorable analysts are available. These disclosure strategies aim to influence the information flows to the market and allow repurchasing firms to repurchase their shares at a discounted price. We further show that insiders of repurchasing firms adjust their subsequent stock trading accordingly. Following more negative conference calls, insiders exhibit a tendency to increase share repurchases or reduce sales of company shares. Our findings underscore the increasingly sophisticated disclosure strategies employed by managers to wield influence over information dynamics in the market leading up to share repurchases.