Information or Strategy: Managers’ Discussion of Prior Conference Call Questions

This paper examines whether, during their current conference calls, managers discuss analyst questions from the prior quarter to influence the market perception of firm operation and earnings. Using a measure of management discussion–question relevance (hereafter MQR), we show that managers are more likely to discuss analysts’ previous questions when firms experience poor performance and information demand is high. We also find that MQR contains incremental information to the market, as reflected in increased trading volume and absolute stock returns. Moreover, we find that information uncertainty increases after managers provide more MQR disclosure, and MQR is negatively related to future firm performance. Overall, our findings suggest that managers strategically discuss analyst questions from the prior quarter and that the market discerns that this disclosure choice is a negative signal.
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