Does an Analyst's Access to Information Vary with the Favorableness of Their Language When Speaking to Management?
Year: 2016
Type: article
Abstract: SYNOPSIS We examine whether analysts who use more favorable language during earnings conference calls subsequently issue more accurate earnings forecasts. Using a large sample of earnings conference calls from the 2004–2013 period for S&P 500 firms, we find a significantly positive relation between an analyst's tone during a firm's call and the accuracy of the analyst's next quarterly earnings forecast for that firm. We find a similar relation for analysts who praise a firm's management during the call. Our findings are consistent with the favorableness of an analyst's language reflecting their access to a firm's management. In additional analyses, we find that female analysts, analysts with less general experience, analysts at smaller brokerage firms, and analysts who cover more industries, on average, use significantly more favorable language during earnings conference calls. Overall, we contribute a new proxy, incremental to other proxies, for the analyst-manager relationship.
Source: Accounting Horizons
DOI: 10.2139/ssrn.2789780
Institution: Florida International University
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3122835340