How Do Corporate Managers Explain Quarterly Earnings?

Abstract

Earnings calls increase the amount of public information available to analysts, improving their ability to forecast future earnings with more precision. Hence, participation in an earnings call is pivotal to analysts’ ongoing research process. Prior research has examined how corporate managers disseminate up-to-date information via earnings calls and press releases, often focusing on subsequent investor reactions to the newly announced information. In this study, we are interested in answering how and why corporate managers share up-to-date information. Indeed, we argue that an analyst who is aware of a corporate manager’s motivation during an earnings call is more prepared to assess the newly announced information.