Hiding or Helping? Determinants and Consequences of the Timing of Earnings Conference Calls

Date
2020-08-15
Authors
Basu, Sudipta
Xiang, Zhongnan
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Abstract
Open conference calls are an important information source because of their forward-looking discussion, interactive nature, and easy accessibility. Using Bloomberg data, we investigate why firms time earnings conference calls differently and how the stock market interprets and reacts to firms' timing choices. We directly measure retrospective and prospective news that derives from earnings calls by earnings surprise and the tone of forward-looking statements. We find that firms with more extreme news (both good and bad) tend to hold calls outside trading hours, especially in the evening. To test whether the market understands the information of "timing," we conduct an event study around the date when firms schedule the calls. We find a higher trading volume when the market is notified of an upcoming switching from outside to during trading hours. Overall, our results suggest that firms strategically time conference calls and investors infer news from the timing.
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Information Asymmetry, Litigation Risk, Market Liquidity
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