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The effect of manager-specific optimism on the tone of earnings conference calls

Author

Listed:
  • Angela K. Davis

    (University of Oregon)

  • Weili Ge

    (University of Washington)

  • Dawn Matsumoto

    (University of Washington)

  • Jenny Li Zhang

    (The University of British Columbia)

Abstract

The use of more or less positive language in corporate disclosures has been the subject of increased interest in the academic literature. We add to this stream of research by examining whether there is a manager-specific component in the tone of earnings-announcement related conference calls. We find that the tone of conference calls that is not explained by current performance, future performance, and strategic incentives has a significant manager-specific component. We also find that tone is significantly associated with manager-specific factors such as early career experiences and involvement in charitable organizations. Taken together, our findings indicate that, in addition to reflecting current and future performance, the tone of conference calls is significantly influenced by a manager-specific tendency to be optimistic or pessimistic. We also find some evidence of a manager-specific component to conference call returns, which is consistent with manager-specific optimism impacting investors’ interpretation of disclosures made in conference calls.

Suggested Citation

  • Angela K. Davis & Weili Ge & Dawn Matsumoto & Jenny Li Zhang, 2015. "The effect of manager-specific optimism on the tone of earnings conference calls," Review of Accounting Studies, Springer, vol. 20(2), pages 639-673, June.
    • Handle: RePEc:spr:reaccs:v:20:y:2015:i:2:d:10.1007_s11142-014-9309-4
    DOI: 10.1007/s11142-014-9309-4
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    JEL classification:

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

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