This paper examines whether analysts and investors efficiently incorporate the informational signals from managerial linguistic complexity (e.g., Fog) into their forecasts and trading decisions. We predict that a manager’s Fog during a conference call provides a signal of their private information through their willingness to engage with analyst questions. We find that informative (obfuscatory) managerial Fog provides a positive (negative) signal of future earnings growth. We also find that analysts efficiently revise their forecasts to both positive and negative signals, whereas investors only correctly interpret obfuscation during the call; there is a delayed price reaction to informative Fog. However, when buy-side investors ask questions during a call, we find an efficient price reaction to informative Fog. Our findings highlight an important benefit of two-way interactive disclosures and underline the importance of active call participation for efficiently incorporating linguistic signals of managers’ private information. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: D82; G14; G20; M41.
本文探讨了分析师和投资者是否能有效地将来自经理人语言复杂性（如 Fog）的信息信号纳入其预测和交易决策中。我们预测，经理人在电话会议中的 Fog 会通过其回答分析师问题的意愿提供其私人信息的信号。我们发现，信息性（模糊性）的经理人 "雾 "提供了未来盈利增长的积极（消极）信号。我们还发现，分析师对积极和消极信号都能有效地修正他们的预测，而投资者只能在电话会议中正确理解模糊信号；对信息雾的价格反应是延迟的。然而，当买方投资者在电话会议期间提出问题时，我们发现价格对信息性迷雾做出了有效反应。我们的研究结果凸显了双向互动披露的一个重要优势，并强调了积极参与电话会议对于有效纳入管理者私人信息语言信号的重要性。数据可用性：数据可从文中引用的公开来源获得。JEL 分类：D82; G14; G20D82；G14；G20；M41。
{"title":"Do Analysts and Investors Efficiently Respond to Managerial Linguistic Complexity during Conference Calls?","authors":"Brian J. Bushee, Ying Huang","doi":"10.2308/tar-2019-0358","DOIUrl":"https://doi.org/10.2308/tar-2019-0358","url":null,"abstract":"\u0000 This paper examines whether analysts and investors efficiently incorporate the informational signals from managerial linguistic complexity (e.g., Fog) into their forecasts and trading decisions. We predict that a manager’s Fog during a conference call provides a signal of their private information through their willingness to engage with analyst questions. We find that informative (obfuscatory) managerial Fog provides a positive (negative) signal of future earnings growth. We also find that analysts efficiently revise their forecasts to both positive and negative signals, whereas investors only correctly interpret obfuscation during the call; there is a delayed price reaction to informative Fog. However, when buy-side investors ask questions during a call, we find an efficient price reaction to informative Fog. Our findings highlight an important benefit of two-way interactive disclosures and underline the importance of active call participation for efficiently incorporating linguistic signals of managers’ private information.\u0000 Data Availability: Data are available from the public sources cited in the text.\u0000 JEL Classifications: D82; G14; G20; M41.","PeriodicalId":503285,"journal":{"name":"The Accounting Review","volume":"60 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139634057","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study provides evidence that private loan issuance offers opportunities for borrowers to learn new information about their own risks and subsequently disclose such information in their risk factor disclosures (RFDs) to satisfy lenders’ demand for transparency about borrowers’ risks. This loan issuance effect on risk disclosures is more pronounced when greater learning opportunities are present and when lenders have a stronger demand for borrowers’ risk information transparency. Further analyses suggest that the enhanced risk disclosures following loan issuance not only benefit lenders by reducing the costs of accessing the secondary credit markets, but also create spillover benefits for equity investors by increasing risk information about the borrower and reducing uncertainty about the borrower’s risk. Taken together, these findings suggest that borrowers’ private interactions with lenders provide new opportunities for managers to generate and reflect fresh information in corporate risk disclosures, ultimately benefiting a wide range of capital market participants. Data Availability: Data are available from the sources identified in the paper. JEL Classifications: G21; G32; M41.
{"title":"Private Loan Issuance and Risk Factor Disclosure","authors":"Lili Dai, W. Landsman, Zihang Peng","doi":"10.2308/tar-2021-0236","DOIUrl":"https://doi.org/10.2308/tar-2021-0236","url":null,"abstract":"\u0000 This study provides evidence that private loan issuance offers opportunities for borrowers to learn new information about their own risks and subsequently disclose such information in their risk factor disclosures (RFDs) to satisfy lenders’ demand for transparency about borrowers’ risks. This loan issuance effect on risk disclosures is more pronounced when greater learning opportunities are present and when lenders have a stronger demand for borrowers’ risk information transparency. Further analyses suggest that the enhanced risk disclosures following loan issuance not only benefit lenders by reducing the costs of accessing the secondary credit markets, but also create spillover benefits for equity investors by increasing risk information about the borrower and reducing uncertainty about the borrower’s risk. Taken together, these findings suggest that borrowers’ private interactions with lenders provide new opportunities for managers to generate and reflect fresh information in corporate risk disclosures, ultimately benefiting a wide range of capital market participants.\u0000 Data Availability: Data are available from the sources identified in the paper.\u0000 JEL Classifications: G21; G32; M41.","PeriodicalId":503285,"journal":{"name":"The Accounting Review","volume":"26 11","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139456633","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper evaluates the real effects of the new lease standard, ASC 842, on firms’ investment and operational outcomes. Using a sample of airline companies, we find that, subsequent to the promulgation of ASC 842 (2016–2018), public airlines reduce operating lease usage by about seven to ten percentage points relative to private airlines. The reduced lease usage is replaced by increased ownership, suggesting an equilibrium shift in firms’ investment due to changes in the cost-benefit tradeoffs associated with the operating lease classification. We also find evidence that the decline in lease usage hinders public airlines’ operational flexibility, as we observe more idle capacity in flights post-ASC 842. Facing excess capacity, public airlines seem to deploy their aircraft to shorter flying routes, raising the possibility of more wear and tear on the fleet. Overall, our evidence suggests that the new lease standard has intended and unintended real effects. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: M41; M48; D22; D24; D25; E22; G38.
{"title":"Leasing Loses Altitude While Ownership Takes Off: Real Effects of the New Lease Standard","authors":"Bin Li, M. Venkatachalam","doi":"10.2308/tar-2022-0290","DOIUrl":"https://doi.org/10.2308/tar-2022-0290","url":null,"abstract":"\u0000 This paper evaluates the real effects of the new lease standard, ASC 842, on firms’ investment and operational outcomes. Using a sample of airline companies, we find that, subsequent to the promulgation of ASC 842 (2016–2018), public airlines reduce operating lease usage by about seven to ten percentage points relative to private airlines. The reduced lease usage is replaced by increased ownership, suggesting an equilibrium shift in firms’ investment due to changes in the cost-benefit tradeoffs associated with the operating lease classification. We also find evidence that the decline in lease usage hinders public airlines’ operational flexibility, as we observe more idle capacity in flights post-ASC 842. Facing excess capacity, public airlines seem to deploy their aircraft to shorter flying routes, raising the possibility of more wear and tear on the fleet. Overall, our evidence suggests that the new lease standard has intended and unintended real effects.\u0000 Data Availability: Data are available from the public sources cited in the text.\u0000 JEL Classifications: M41; M48; D22; D24; D25; E22; G38.","PeriodicalId":503285,"journal":{"name":"The Accounting Review","volume":"7 13","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139457252","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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