Accounting comparability and managers’ discretionary disclosures over conference calls

Abstract

This study examines how accounting comparability affects managers’ disclosure linguistic choices during the conference call. We find that managers use less complex language during the conference when their prepared financial information exhibit greater comparability with industry peer firms. More importantly, the further analyses document a negative relation between financial information comparability and the informativeness of managerial linguistic complexity of the conference call by decomposing linguistic complexity into its latent information and obfuscation components, suggesting that managers strategically use the optimal level of mandatory and voluntary disclosure channels to convey information. We also find the strategic disclosure behavior when management disclosure inceptives or market competition are high. Our additional tests indicate that while managers reduce information language, analysts tend to be more active during the conference for firms with higher financial information comparability. Overall, the findings advance our understanding of management disclosure incentives regarding voluntary information, concurrently with mandatory primary reporting.