Do Conference Calls Affect Analysts' Forecasts?

In 1998, the SEC expressed concern that conference calls encourage selective disclosure by revealing new information to financial analysts privy to the call. This study investigates whether the regular use of earnings-related conference calls increases the amount of information available to financia...

Full description

Saved in:
Bibliographic Details
Published in:The Accounting review 2002-04, Vol.77 (2), p.285-316
Main Authors: Bowen, Robert M., Davis, Angela K., Matsumoto, Dawn A.
Format: Article
Language:English
Subjects:
Accounting
Analysis
Analytical forecasting
Behavior
Business communication
Communication
Conference tables
Disclosure
Earnings forecasting
Economic forecasting
Error
Financial analysis
Forecasting models
Forecasts
Influence
Information
Investors
P values
Public information
Regulation FD
Securities analysis
Studies
Teleconferencing
Variable coefficients
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:In 1998, the SEC expressed concern that conference calls encourage selective disclosure by revealing new information to financial analysts privy to the call. This study investigates whether the regular use of earnings-related conference calls increases the amount of information available to financial analysts by examining the effect of conference calls on analysts' forecast error and dispersion. Results indicate that conference calls increase analysts' ability to forecast earnings accurately, suggesting that these calls increase the total information available about a firm. We also find some evidence that conference calls decrease dispersion among analysts. Given conference calls were generally restricted during our sample period, our evidence suggests that conference calls may have contributed to an information gap between analysts privy to the call and the remainder of the investment community. We also investigate whether conference calls differentially affect analysts' forecast errors depending on analysts' prior forecasting ability or brokerage-house affiliation. We find evidence suggesting that analysts with relatively weak prior forecasting performance benefit more from conference calls, suggesting that conference calls help "level the playing field" across analysts.
ISSN:0001-4826
1558-7967
DOI:10.2308/accr.2002.77.2.285