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The information role of earnings conference call tone : evidence from stock price crash risk
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Fu, Xi, Wu, Xiaoxi and Zhang, Zhifang (2021) The information role of earnings conference call tone : evidence from stock price crash risk. Journal of Business Ethics, 173 . pp. 643-660. doi:10.1007/s10551-019-04326-1 ISSN 0167-4544.
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Official URL: https://doi.org/10.1007/s10551-019-04326-1
Abstract
This paper investigates whether and how the disclosure tone of earnings conference calls predicts future stock price crash risk. Using US public firms’ conference call transcripts from 2010 to 2015, we find that firms with less optimistic tone of year-end conference calls experience higher stock price crash risk in the following year. Additional analyses reveal that the predictive power of tone is more pronounced among firms with better information environment and lower managerial equity incentives, suggesting that extrinsic motivations for truthful disclosure partially explain the predictive power of conference call tone. Our results shed light on the long-term information role of conference call tone by exploring the setting of extreme future downside risk, when managers have conflicting incentives either to unethically manipulate disclosure tone to hide bad news or to engage in ethical and truthful communication.
| Item Type: | Journal Article | ||||||||
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| Subjects: | H Social Sciences > HF Commerce H Social Sciences > HF Commerce > HF5601 Accounting H Social Sciences > HG Finance |
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| Divisions: | Faculty of Social Sciences > Warwick Business School > Accounting Faculty of Social Sciences > Warwick Business School |
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| Library of Congress Subject Headings (LCSH): | Telephone conferencing, Tone (Phonetics), Corporations -- Accounting -- Ethics, Stocks -- Prices -- History, Financial risk , Financial disclosure | ||||||||
| Journal or Publication Title: | Journal of Business Ethics | ||||||||
| Publisher: | Springer Netherlands | ||||||||
| ISSN: | 0167-4544 | ||||||||
| Official Date: | October 2021 | ||||||||
| Dates: |
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| Volume: | 173 | ||||||||
| Page Range: | pp. 643-660 | ||||||||
| DOI: | 10.1007/s10551-019-04326-1 | ||||||||
| Status: | Peer Reviewed | ||||||||
| Publication Status: | Published | ||||||||
| Reuse Statement (publisher, data, author rights): | This is a post-peer-review, pre-copyedit version of an article published in Journal of Business Ethics. The final authenticated version is available online at: http://dx.doi.org/10.1007/s10551-019-04326-1 | ||||||||
| Access rights to Published version: | Open Access (Creative Commons) | ||||||||
| Date of first compliant deposit: | 23 October 2019 | ||||||||
| Date of first compliant Open Access: | 2 November 2020 | ||||||||
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