{"id":5659,"date":"2024-11-11T22:46:27","date_gmt":"2024-11-11T21:46:27","guid":{"rendered":"https:\/\/eaa-online.org\/arc\/?p=5659"},"modified":"2024-11-11T22:46:27","modified_gmt":"2024-11-11T21:46:27","slug":"can-analysts-elicit-useful-information-by-asking-unique-questions-in-earnings-conference-calls","status":"publish","type":"post","link":"https:\/\/eaa-online.org\/arc\/blog\/2024\/11\/11\/can-analysts-elicit-useful-information-by-asking-unique-questions-in-earnings-conference-calls\/","title":{"rendered":"Can Analysts Elicit Useful Information by Asking Unique Questions in Earnings Conference Calls?"},"content":{"rendered":"<p>Paper forthcoming at European Accoutning Review &#8211; <a href=\"https:\/\/www.tandfonline.com\/doi\/full\/10.1080\/09638180.2024.2410892\">https:\/\/www.tandfonline.com\/doi\/full\/10.1080\/09638180.2024.2410892<\/a><\/p>\n<p>Kristian D. Allee<sup>a<\/sup>*, Chuong Do<sup>b<\/sup>, and Huy N. Do<sup>c<\/sup><\/p>\n<p><sup>a<\/sup>Walton College of Business, University of Arkansas, Fayetteville, USA; <sup>b<\/sup>College of Business, University of Nevada &#8211; Reno, Reno, USA; <sup>c<\/sup>Collins College of Business, The University of Tulsa, Tulsa, USA<\/p>\n<p>&nbsp;<\/p>\n<p>We examine whether analysts can gather useful information based on their public interactions with firm managers. While analysts\u2019 forecasts and price targets are often a \u201cblack box,\u201d earnings conference calls offer a unique opportunity to see their information gathering processes through the questions they ask. We design a measure to capture the \u201cuniqueness\u201d of a question by comparing how similar it is to other conference call content or questions. Specifically, we use cosine similarity to compare an individual analyst\u2019s question(s) in a firm\u2019s quarterly earnings conference call against three benchmarks: 1) questions from the other analysts on the same call, 2) the same analyst\u2019s questions on the same firm\u2019s prior calls, and 3) the management-prepared narrative on the same call. The underlying intuition of our method is that the conformity of a question on the call, to one of those three reference points, reveals what information is desired and how the questioner intends to extract the information. Through analyses built around this uniqueness measure, we aim to enhance our understanding of how analysts publicly gather information and the impact of these information gathering activities.<\/p>\n<p>Our results show that the uniqueness of individual analysts\u2019 questions varies with their individual characteristics, controlling for firm and call characteristics. Analysts with superior private information ask more unique questions on the call. Conversely, more experienced analysts, analysts from larger brokers, and analysts who forecast more frequently ask less unique questions. Turning to the consequences of analysts\u2019 information gathering, the results show that unique questions increase the overall number of topics (as measured by Latent Dirichlet Allocation topic modeling) of analysts\u2019 questions as well as managers\u2019 answers in an earnings call. Thus, analysts\u2019 unique questions can elicit new and different topics of discussion. Furthermore, when analysts ask more unique questions, their likelihood of revising their forecasts after the call and the magnitude of the revision increase with the size of the earnings surprise. Finally, the accuracy of an analyst\u2019s forecast appears to be associated with the uniqueness of their questions on conference calls, again conditioned on the size of the earnings surprise.<\/p>\n<p>We next examine how the market responds to the uniqueness of analysts\u2019 questions in conference calls. First, using \u201creal-time,\u201d millisecond trading data from conference calls occurring during market hours, we find that the Q&amp;A session on an earnings conference call is more informative in the presence of unique analyst questions. This result suggests that analysts\u2019 information gathering activities on conference calls, as captured through the uniqueness of their questions, yields value relevant information for both analysts and investors. Second, controlling for the size of the revision, investors appear to react more to forecasts made by analysts who ask more unique questions on the preceding conference call. This result supports the idea that analysts\u2019 questions can serve as public signals of their information gathering capabilities to the market, leading to a larger market reaction to their revised forecasts.<\/p>\n<p>Our study extends the literature on analysts\u2019 behavior by shifting the focus from their forecast and reports to their information gathering behaviors, specifically their (unique) questions on conference calls, as an indication as to whether\/if this behavior will then influence their earnings forecast revisions. We also provide insights into analysts\u2019 forecasting behavior based on earnings conference calls and the market\u2019s use of analysts\u2019 information in interpreting earnings information. Our paper documents the significant nuance in the interactions between managers and analysts, as well as within analysts, and there is an association between analysts\u2019 interactions and analysts\u2019 forecasting behavior as well as the market\u2019s reaction. Additionally, our study contributes to the literature that examines earnings conference calls at the conversation level.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Paper forthcoming at European Accoutning Review &#8211; https:\/\/www.tandfonline.com\/doi\/full\/10.1080\/09638180.2024.2410892 Kristian D. Alleea*, Chuong Dob, and Huy N. Doc aWalton College of Business, University of Arkansas, Fayetteville, USA; bCollege of Business, University of Nevada &#8211; Reno, Reno, USA; cCollins College of Business, The University of Tulsa, Tulsa, USA &nbsp; We examine whether analysts can gather useful information [&hellip;]<\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0},"categories":[1],"tags":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.12 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Can Analysts Elicit Useful Information by Asking Unique Questions in Earnings Conference Calls? - ARC<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/eaa-online.org\/arc\/blog\/2024\/11\/11\/can-analysts-elicit-useful-information-by-asking-unique-questions-in-earnings-conference-calls\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Can Analysts Elicit Useful Information by Asking Unique Questions in Earnings Conference Calls? - ARC\" \/>\n<meta property=\"og:description\" content=\"Paper forthcoming at European Accoutning Review &#8211; https:\/\/www.tandfonline.com\/doi\/full\/10.1080\/09638180.2024.2410892 Kristian D. Alleea*, Chuong Dob, and Huy N. Doc aWalton College of Business, University of Arkansas, Fayetteville, USA; bCollege of Business, University of Nevada &#8211; Reno, Reno, USA; cCollins College of Business, The University of Tulsa, Tulsa, USA &nbsp; We examine whether analysts can gather useful information [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/eaa-online.org\/arc\/blog\/2024\/11\/11\/can-analysts-elicit-useful-information-by-asking-unique-questions-in-earnings-conference-calls\/\" \/>\n<meta property=\"og:site_name\" content=\"ARC\" \/>\n<meta property=\"article:published_time\" content=\"2024-11-11T21:46:27+00:00\" \/>\n<meta name=\"author\" content=\"ARC Commitee\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"ARC Commitee\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/eaa-online.org\/arc\/blog\/2024\/11\/11\/can-analysts-elicit-useful-information-by-asking-unique-questions-in-earnings-conference-calls\/\",\"url\":\"https:\/\/eaa-online.org\/arc\/blog\/2024\/11\/11\/can-analysts-elicit-useful-information-by-asking-unique-questions-in-earnings-conference-calls\/\",\"name\":\"Can Analysts Elicit Useful Information by Asking Unique Questions in Earnings Conference Calls? - ARC\",\"isPartOf\":{\"@id\":\"https:\/\/eaa-online.org\/arc\/#website\"},\"datePublished\":\"2024-11-11T21:46:27+00:00\",\"dateModified\":\"2024-11-11T21:46:27+00:00\",\"author\":{\"@id\":\"https:\/\/eaa-online.org\/arc\/#\/schema\/person\/4eb052dd692b65a6b0d26b1f670a79aa\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/eaa-online.org\/arc\/blog\/2024\/11\/11\/can-analysts-elicit-useful-information-by-asking-unique-questions-in-earnings-conference-calls\/\"]}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/eaa-online.org\/arc\/#website\",\"url\":\"https:\/\/eaa-online.org\/arc\/\",\"name\":\"ARC\",\"description\":\"Advanced Resources Center\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/eaa-online.org\/arc\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/eaa-online.org\/arc\/#\/schema\/person\/4eb052dd692b65a6b0d26b1f670a79aa\",\"name\":\"ARC Commitee\",\"url\":\"https:\/\/eaa-online.org\/arc\/blog\/members\/61\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Can Analysts Elicit Useful Information by Asking Unique Questions in Earnings Conference Calls? - ARC","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/eaa-online.org\/arc\/blog\/2024\/11\/11\/can-analysts-elicit-useful-information-by-asking-unique-questions-in-earnings-conference-calls\/","og_locale":"en_US","og_type":"article","og_title":"Can Analysts Elicit Useful Information by Asking Unique Questions in Earnings Conference Calls? - ARC","og_description":"Paper forthcoming at European Accoutning Review &#8211; https:\/\/www.tandfonline.com\/doi\/full\/10.1080\/09638180.2024.2410892 Kristian D. 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