NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
loading...

Tips and Tells from Managers: How Analysts and the Market Read Between the Lines of Conference Calls

Marina Druz, Alexander F. Wagner, Richard J. Zeckhauser

NBER Working Paper No. 20991
Issued in February 2015
NBER Program(s):Corporate Finance

Stock prices react significantly to the tone (negativity of words) managers use on earnings conference calls. This reaction reflects reasonably rational use of information. “Tone surprise” – the residual when negativity in managerial tone is regressed on the firm’s recent economic performance and CEO fixed effects – predicts future earnings and analyst uncertainty. Prices move more, as hypothesized, in firms where tone surprise predicts more strongly. Experienced analysts respond appropriately in revising their forecasts; inexperienced analysts overreact (underreact) to tone surprises in presentations (answers). Post-call price drift, like post-earnings announcement drift, suggests less-than-full-use of information embedded in managerial tone.

download in pdf format
   (858 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w20991

Users who downloaded this paper also downloaded* these:
Allen, Qian, Zhang, and Zhao w17828 China's Financial System: Opportunities and Challenges
Qian, Gong, and Chen w18784 Untangling Searchable and Experiential Quality Responses to Counterfeits
Cohen, Lou, and Malloy w19429 Playing Favorites: How Firms Prevent the Revelation of Bad News
Dzieliński, Wagner, and Zeckhauser w23425 Straight Talkers and Vague Talkers: The Effects of Managerial Style in Earnings Conference Calls
Boudoukh, Feldman, Kogan, and Richardson w18725 Which News Moves Stock Prices? A Textual Analysis
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us