IDEAS home Printed from https://ideas.repec.org/p/arx/papers/2505.18419.html
   My bibliography  Save this paper

How do managers' non-responses during earnings calls affect analyst forecasts

Author

Listed:
  • Qingwen Liang
  • Matias Carrasco Kind

Abstract

This paper examines the impact of managers' non-responses (NORs) during quarterly earnings calls on analyst forecast behavior by developing a novel measure of NORs using two large language models: ChatGPT-4 and LLaMA 3.3. We adopt a three step prompting approach including identification, classification, and evaluation, to extract NORs from earnings call transcripts of S&P 500 firms. We find that a higher incidence of NORs is significantly associated with greater analyst forecast errors, dispersion, and uncertainty. These effects are more pronounced among firms with high institutional ownership, greater R&D expenditures, operations across multiple industries, and earnings calls held during the COVID-19 period. Further analysis shows that NORs are followed by greater post-earnings announcement drift, higher return volatility, increased trading volume, and wider bid-ask spreads, suggesting that NORs raise information processing costs and exacerbate uncertainty. Overall, our findings indicate that managers' non-responses during earnings calls impair the information environment for analysts and investors.

Suggested Citation

  • Qingwen Liang & Matias Carrasco Kind, 2025. "How do managers' non-responses during earnings calls affect analyst forecasts," Papers 2505.18419, arXiv.org.
    • Handle: RePEc:arx:papers:2505.18419
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/2505.18419
    File Function: Latest version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Dye, Ra, 1985. "Disclosure Of Nonproprietary Information," Journal of Accounting Research, Wiley Blackwell, vol. 23(1), pages 123-145.
    2. X. Frank Zhang, 2006. "Information Uncertainty and Stock Returns," Journal of Finance, American Finance Association, vol. 61(1), pages 105-137, February.
    3. Graham, John R. & Harvey, Campbell R. & Rajgopal, Shiva, 2005. "The economic implications of corporate financial reporting," Journal of Accounting and Economics, Elsevier, vol. 40(1-3), pages 3-73, December.
    4. Allison Koester & Russell Lundholm & Mark Soliman, 2016. "Attracting Attention in a Limited Attention World: Exploring the Causes and Consequences of Extreme Positive Earnings Surprises," Management Science, INFORMS, vol. 62(10), pages 2871-2896, October.
    5. Jung, Wo & Kwon, Yk, 1988. "Disclosure When The Market Is Unsure Of Information Endowment Of Managers," Journal of Accounting Research, Wiley Blackwell, vol. 26(1), pages 146-153.
    6. Chansog (Francis) Kim & Ke Wang & Liandong Zhang, 2019. "Readability of 10‐K Reports and Stock Price Crash Risk," Contemporary Accounting Research, John Wiley & Sons, vol. 36(2), pages 1184-1216, June.
    7. Lang, M & Lundholm, R, 1993. "Cross-Sectional Determinants Of Analyst Ratings Of Corporate Disclosures," Journal of Accounting Research, Wiley Blackwell, vol. 31(2), pages 246-271.
    8. Sanford J. Grossman & Oliver D. Hart, 1980. "Takeover Bids, the Free-Rider Problem, and the Theory of the Corporation," Bell Journal of Economics, The RAND Corporation, vol. 11(1), pages 42-64, Spring.
    9. Julian Junyan Wang & Victor Xiaoqi Wang, 2025. "Assessing Consistency and Reproducibility in the Outputs of Large Language Models: Evidence Across Diverse Finance and Accounting Tasks," Papers 2503.16974, arXiv.org, revised Jun 2025.
    10. Verrecchia, Robert E., 1983. "Discretionary disclosure," Journal of Accounting and Economics, Elsevier, vol. 5(1), pages 179-194, April.
    11. Andreas Barth & Sasan Mansouri & Fabian Wöbbeking, 2023. "“Let Me Get Back to You”—A Machine Learning Approach to Measuring NonAnswers," Management Science, INFORMS, vol. 69(10), pages 6333-6348, October.
    12. Tim Loughran & Bill Mcdonald, 2011. "When Is a Liability Not a Liability? Textual Analysis, Dictionaries, and 10‐Ks," Journal of Finance, American Finance Association, vol. 66(1), pages 35-65, February.
    13. Li, Feng, 2008. "Annual report readability, current earnings, and earnings persistence," Journal of Accounting and Economics, Elsevier, vol. 45(2-3), pages 221-247, August.
    14. Jennifer Francis & Ryan Lafond & Per Olsson & Katherine Schipper, 2007. "Information Uncertainty and Post‐Earnings‐Announcement‐Drift," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 34(3‐4), pages 403-433, April.
    15. Skinner, Douglas J., 1997. "Earnings disclosures and stockholder lawsuits," Journal of Accounting and Economics, Elsevier, vol. 23(3), pages 249-282, November.
    16. Field, Laura & Lowry, Michelle & Shu, Susan, 2005. "Does disclosure deter or trigger litigation?," Journal of Accounting and Economics, Elsevier, vol. 39(3), pages 487-507, September.
    17. Shi, Charles, 2003. "On the trade-off between the future benefits and riskiness of R&D: a bondholders' perspective," Journal of Accounting and Economics, Elsevier, vol. 35(2), pages 227-254, June.
    18. Jennifer Francis & Ryan Lafond & Per Olsson & Katherine Schipper, 2007. "Information Uncertainty and Post-Earnings-Announcement-Drift," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 34(3-4), pages 403-433.
    19. Healy, Paul M. & Palepu, Krishna G., 2001. "Information asymmetry, corporate disclosure, and the capital markets: A review of the empirical disclosure literature," Journal of Accounting and Economics, Elsevier, vol. 31(1-3), pages 405-440, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Iatridis, George Emmanuel, 2016. "Financial reporting language in financial statements: Does pessimism restrict the potential for managerial opportunism?," International Review of Financial Analysis, Elsevier, vol. 45(C), pages 1-17.
    2. Wang, Sumingyue & Wang, Xinlu & Xu, Liang, 2023. "Debt maturity structure and the quality of risk disclosures," Journal of Corporate Finance, Elsevier, vol. 83(C).
    3. Yun Lou, 2019. "Disclosure of Pending Lawsuits and Bond Terms," Management Science, INFORMS, vol. 65(4), pages 1926-1947, April.
    4. Richard Chung & Bryan Byung-Hee Lee & Woo-Jong Lee & Byungcherl Charlie Sohn, 2016. "Do Managers Withhold Good News from Labor Unions?," Management Science, INFORMS, vol. 62(1), pages 46-68, January.
    5. Rezaee, Zabihollah & Tuo, Ling, 2017. "Voluntary disclosure of non-financial information and its association with sustainability performance," Advances in accounting, Elsevier, vol. 39(C), pages 47-59.
    6. Price, S. McKay & Doran, James S. & Peterson, David R. & Bliss, Barbara A., 2012. "Earnings conference calls and stock returns: The incremental informativeness of textual tone," Journal of Banking & Finance, Elsevier, vol. 36(4), pages 992-1011.
    7. Qiang Cheng & Young Jun Cho & Jae B. Kim, 2021. "Managers’ pay duration and voluntary disclosures," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 48(7-8), pages 1332-1367, July.
    8. Elizabeth Blankespoor & Bradley E. Hendricks & Joseph Piotroski & Christina Synn, 2022. "Real-time revenue and firm disclosure," Review of Accounting Studies, Springer, vol. 27(3), pages 1079-1116, September.
    9. Stephan Hollander & Maarten Pronk & Erik Roelofsen, 2010. "Does Silence Speak? An Empirical Analysis of Disclosure Choices During Conference Calls," Journal of Accounting Research, Wiley Blackwell, vol. 48(3), pages 531-563, June.
    10. Beyer, Anne & Cohen, Daniel A. & Lys, Thomas Z. & Walther, Beverly R., 2010. "The financial reporting environment: Review of the recent literature," Journal of Accounting and Economics, Elsevier, vol. 50(2-3), pages 296-343, December.
    11. Helen Hurwitz & Yan Sun, 2023. "Regulation Fair Disclosure and the timeliness of long‐horizon management forecasts," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 50(9-10), pages 1808-1835, October.
    12. S. P. Kothari & Susan Shu & Peter D. Wysocki, 2009. "Do Managers Withhold Bad News?," Journal of Accounting Research, Wiley Blackwell, vol. 47(1), pages 241-276, March.
    13. Chen, Shuping & Matsumoto, Dawn & Rajgopal, Shiva, 2011. "Is silence golden? An empirical analysis of firms that stop giving quarterly earnings guidance," Journal of Accounting and Economics, Elsevier, vol. 51(1-2), pages 134-150, February.
    14. Christian Leuz & Peter D. Wysocki, 2016. "The Economics of Disclosure and Financial Reporting Regulation: Evidence and Suggestions for Future Research," Journal of Accounting Research, Wiley Blackwell, vol. 54(2), pages 525-622, May.
    15. Heitzman, Shane & Wasley, Charles & Zimmerman, Jerold, 2010. "The joint effects of materiality thresholds and voluntary disclosure incentives on firms' disclosure decisions," Journal of Accounting and Economics, Elsevier, vol. 49(1-2), pages 109-132, February.
    16. Ole-Kristian Hope & Congcong Li & Mark Shuai Ma & Xijiang Su, 2023. "Is silence golden sometimes? Management guidance withdrawals during the COVID-19 pandemic," Review of Accounting Studies, Springer, vol. 28(4), pages 2319-2360, December.
    17. Chen, Shuping & Matsumoto, Dawn & Rajgopal, Shiva, 2011. "Is silence golden? An empirical analysis of firms that stop giving quarterly earnings guidance," Journal of Accounting and Economics, Elsevier, vol. 51(1), pages 134-150.
    18. Allen H. Huang & Jianghua Shen & Amy Y. Zang, 2022. "The unintended benefit of the risk factor mandate of 2005," Review of Accounting Studies, Springer, vol. 27(4), pages 1319-1355, December.
    19. E. Cheynel & M. Liu-Watts, 2020. "A simple structural estimator of disclosure costs," Review of Accounting Studies, Springer, vol. 25(1), pages 201-245, March.
    20. Jung Min Kim & Daniel J. Taylor & Robert E. Verrecchia, 2021. "Voluntary disclosure when private information and disclosure costs are jointly determined," Review of Accounting Studies, Springer, vol. 26(3), pages 971-1001, September.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:2505.18419. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.