Earnings conference calls and stock returns: The incremental informativeness of textual tone

Journal of Banking and Finance

Volumn 36, Issue 4, 2012, Pages 992-1011

  Price, S McKay ^a   Doran, James S ^b   Peterson, David R ^b   Bliss, Barbara A ^b  

^a LEHIGH UNIVERSITY   (United States)

^b FLORIDA STATE UNIVERSITY   (United States)

Author keywords

Conference calls; Content analysis; Disclosure; Post earnings announcement drift; Stock returns; Textual analysis

Indexed keywords

EID: 84857108741     PISSN: 03784266     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.jbankfin.2011.10.013     Document Type: Article

References (69)

1. Abarbanell J.S., Bernard V.L. Tests of analysts' overreaction/underreaction to earnings information as an explanation for anomalous stock price behavior. Journal of Finance 1992, 47:1181-1207.
2. Akbas, F., Boehmer, E., Erturk, B., Sorescu, S., 2010. Don't shoot the messenger: short interest, returns, and fundamentals. Working paper, Texas A&M University.
3. Allen F., Michaely R. Payout policy. Handbook of the Economics of Finance 2002, Elsevier Science, Amsterdam. G. Constantinides, M. Harris, R. Stulz (Eds.).
4. Amir E., Lev B. Value-relevance of non-financial information: the wireless communications industry. Journal of Accounting and Economics 1996, 22:3-30.
5. Ball R., Brown P. An empirical evaluation of accounting income numbers. Journal of Accounting Research 1968, 6:159-178.
6. Barber B.M., Odean T. All that glitters: the effect of attention and news on the buying behavior of individual and institutional investors. Review of Financial Studies 2008, 21(2):785-818.
7. Beaver W.H. The information content of annual earnings announcements. Journal of Accounting Research 1968, 6:67-92.
8. Berelson B.R. Content Analysis in Communication Research 1952, Free Press, New York.
9. Bernard V. Stock price reactions to earnings announcements: a summary of recent anomalous evidence and possible explanations. Advances in Behavioral Finance 1992, Russell Sage Foundation, New York. R. Thaler (Ed.).
10. Bernard V., Thomas J. Post-earnings-announcement drift: delayed price response or risk premium?. Journal of Accounting Research 1989, 27:1-36.
11. Bernard V., Thomas J. Evidence that stock prices do not fully reflect the implications of current earnings for future earnings. Journal of Accounting and Economics 1990, 13:305-340.
12. Brav A., Graham J., Harvey C., Michaely R. Payout policy in the 21st century. Journal of Financial Economics 2005, 77:483-527.
13. Brav A., Heaton J.B. Competing theories of financial anomalies. Review of Financial Studies 2002, 15(2):575-606.
14. Brown L.D., Hagerman R.L., Griffin P.A., Zmijewski M.E. An evaluation of alternative proxies for the market's assessment of unexpected earnings. Journal of Accounting and Economics 1987, 9:159-193.
15. Brown S., Hillegeist S.A., Lo K. Conference calls and information asymmetry. Journal of Accounting and Economics 2004, 37:343-366.
16. Campbell J.Y., Ramadorai T., Schwartz A. Caught on tape: institutional trading, stock returns, and earnings announcements. Journal of Financial Economics 2009, 92:66-91.
17. Chung C.K., Pennebaker J.W. The psychological functions of function words. Social Communication 2007, Psychology Press, New York. K. Fiedler (Ed.).
18. Collins D.W., Li O.Z., Xie H. What drives the increased informativeness of earnings announcements over time?. Review of Accounting Studies 2009, 14:1-30.
19. Core J.E. A review of the empirical disclosure literature: discussion. Journal of Accounting and Economics 2001, 31:441-456.
20. Davis, A.K., Piger, J.M., Sedor, L.M., 2008. Beyond the numbers: managers' use of optimistic and pessimistic tone in earnings press releases. AAA 2008 Financial Accounting and Reporting Section (FARS) Paper.
21. DeAngelo H., DeAngelo L. The irrelevance of the MM dividend irrelevance theorem. Journal of Financial Economics 2006, 79:293-315.
22. DeAngelo H., DeAngelo L., Skinner D.J. Are dividends disappearing? Dividend concentration and the consolidation of earnings. Journal of Financial Economics 2004, 72:425-456.
23. Demers, E., Vega, C., 2008. Soft information in earnings announcements: news or noise? Working paper, Federal Reserve Board.
24. Denis D.J., Osobov I. Why do firms pay dividends? International evidence on the determinants of dividend policy. Journal of Financial Economics 2008, 89(1):62-82.
25. Diefenbach D.L. Historical foundations of computer-assisted content analysis. Theory, Method, and Practice in Computer Content Analysis 2001, Ablex, New York. M.D. West (Ed.).
26. Doyle J.T., Lundholm R.J., Soliman M.T. The predicative value of expenses excluded from pro forma earnings. Review of Accounting Studies 2003, 8:145-174.
27. Dye R.A. An evaluation of "essays on disclosure" and the disclosure literature in accounting. Journal of Accounting and Economics 2001, 32:181-235.
28. Engelberg, J., 2008. Costly information processing: evidence from earnings announcements. Working paper, Northwestern University.
29. Foster G., Olsen C., Shevlin T. Earnings releases, anomalies, and the behavior of security returns. The Accounting Review 1984, 59:574-603.
30. Francis J., Lafond R., Olsson P., Schipper K. Information uncertainty and post-earnings-announcement-drift. Journal of Business Finance & Accounting 2007, 34:403-433.
31. Frankel R.M., Johnson M., Skinner D.J. An empirical examination of conference calls as a voluntary disclosure medium. Journal of Accounting Research 1999, 37:133-150.
32. Frankel R.M., Mayew W.J., Sun Y. Do pennies matter? Investor relations consequences of small negative earnings surprises. Review of Accounting Studies 2010, 15:220-242.
33. Graham J.R., Harvey C.R., Rajgopal S. The economic implications of corporate financial reporting. Journal of Accounting and Economics 2005, 40:3-73.
34. Hart R.P. Redeveloping DICTION: theoretical considerations. Theory, Method, and Practice in Computer Content Analysis 2001, Ablex, New York. M.D. West (Ed.).
35. Healy P.M., Palepu K.G. Information asymmetry, corporate disclosure, and the capital markets: a review of the empirical disclosure literature. Journal of Accounting and Economics 2001, 31:405-440.
36. Henry E. Are investors influenced by how earnings press releases are written?. The Journal of Business Communication 2008, 45(4):363-407.
37. Hoberg G., Prabhala N.R. Disappearing dividends, catering, and risk. Review of Financial Studies 2009, 22(1):79-116.
38. Holsti O.R. Computer content analysis. Content Analysis: A Handbook with Applications for the Study of International Crisis 1963, Northwestern University, Evanston, IL. R.C. North, O.R. Holsti, M.G. Zaninovich, D.A. Zinnes (Eds.).
39. Irani A.J. The effect of regulation fair disclosure on the relevance of conference calls to financial analysts. Review of Quantitative Finance and Accounting 2004, 22:15-28.
40. Kimbrough M.D. The effect of conference calls on analyst and market underreaction to earnings announcements. The Accounting Review 2005, 80:189-219.
41. Krippendorf K. Content Analysis: An Introduction to its Methodology 2004, Sage Publications Inc., Thousand Oaks, CA.
42. Laffal J. Toward a conceptual grammar and lexicon. Computers and the Humanities 1970, 4(3):173-186.
43. Lang M.H., Lundholm R.J. Voluntary disclosure and equity offerings: reducing information asymmetry or hyping the stock?. Contemporary Accounting Research 2000, 17(4):623-662.
44. Lewellen J., Shanken J. Learning, asset-pricing tests, and market efficiency. Journal of Finance 2002, 57:1113-1145.
45. Li F. Annual report readability, current earnings, and earnings persistence. Journal of Accounting and Economics 2008, 45:221-247.
46. Liang L. Post-earnings announcement drift and market participants' information processing biases. Review of Accounting Studies 2003, 8:321-345.
47. Loughran T., McDonald B. When is a liability not a liability? Textual analysis, dictionaries, and 10-Ks. Journal of Finance 2011, 66(1):35-65.
48. Matsumoto, D., Pronk, M., Roelofsen, E., 2007. Conference call disclosures and firm performance: an empirical analysis of the length and content of earnings-related conference calls. Working paper, University of Washington.
49. Mayew, W.J., Venkatachalam, M., forthcoming. The power of voice: Managerial affective states and future firm performance. Journal of Finance.
50. Mehrabian A. Silent Messages 1971, Wadsworth Publishing, California.
51. Mehrabian A. Nonverbal Communication 1972, Aldine Atherton, Illinois.
52. Merkl-Davies D.M., Brennan N.M. Discretionary disclosure strategies in corporate narratives: incremental information or impression management?. Journal of Accounting Literature 2007, 26:116-194.
53. Miller M., Modigliani F. Dividend policy, growth, and the valuation of shares. Journal of Business 1961, 34:411-433.
54. NIRI, 1996. Standards and guidance for disclosure. National Investor Relations Institute, Vienna, VA.
55. NIRI, 2004. Standards of practice for investor relations. National Investor Relations Institute, Vienna, VA.
56. Pennebaker J.W., Mehl M.R., Niederhoffer K.G. Psychological aspects of natural language use: OUR words, our selves. Annual Review of Psychology 2003, 54:547-577.
57. Petersen M.A. Estimating standard errors in finance panel data sets: comparing approaches. Review of Financial Studies 2009, 22(1):435-480.
58. Petty R.E., Cacioppo J.T. Communication and Persuasion: Central and Peripheral Routes to Attitude Change 1986, Springer-Verlag, New York.
59. Psathas G. The general inquirer: useful or not?. Computers and the Humanities 1969, 3(3):163-174.
60. Sadique, S., In, F., Veeraraghavan, M., 2008. The impact of spin and tone on stock returns and volatility: evidence from firm-issued earnings announcements and the related press coverage. Working paper, Monash University.
61. Stone P.J., Dunphy D.C., Smith M.S., Ogilvie D.M. The General Inquirer: A Computer Approach to Content Analysis 1966, The MIT Press, Cambridge, MA.
62. Sunder, S.V., 2002. Investor access to conference call disclosures: Impact of regulation fair disclosure on information asymmetry. Working paper, New York University.
63. Tetlock P.C. Giving content to investor sentiment: the role of media in the stock market. Journal of Finance 2007, 62:1139-1168.
64. Tetlock P.C., Saar-Tsechansky M., Macskassy S. More than words: quantifying language to measure firms' fundamentals. Journal of Finance 2008, 63:1437-1467.
65. Uang J.Y., Citron D.B., Sudarsanam S., Taffler R.J. Management going-concern disclosures: impact of corporate governance and auditor reputation. European Financial Management 2006, 12:789-816.
66. Verrecchia R.E. Essays on disclosure. Journal of Accounting and Economics 2001, 32:97-180.
67. West M.D., Fuller L.K. Toward a typology and theoretical grounding for computer content analysis. Theory, Method, and Practice in Computer Content Analysis 2001, Ablex, New York. M.D. West (Ed.).
68. White H. A heteroskedasticity-consistent covariance matrix estimator and a direct test of heteroskedasticity. Econometrica 1980, 48:817-838.
69. Zhang X.F. Information uncertainty and stock returns. Journal of Finance 2006, 61:105-136.