Browsing by Author "Chen, Linyi"

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    Looking Beyond Reported Earnings: A Study of Analysts' Tone in Earnings Conference Calls
    (2024-04-19) Chen, Linyi; Rountree, Brian
    Contrary to previous studies suggesting that analysts lack incentives to uncover unreliable financial results, this study documents a link between analysts' tone during conference calls and measures of reliability. Specifically, this paper finds an association between analysts' tone and restating the reported results for the current quarter, as well as various forms of earnings management. Furthermore, analysts' tone is associated with proxies that are related to future fundamental performance, including future layoffs, the breaking of a string of meet/beat earnings, and future return on assets. These results are robust to controlling for reported performance, management tone, and the contemporaneous market reaction around earnings conference calls consistent with tone reflecting a deeper evaluation beyond just the reported numbers. Overall, the findings from this study are consistent with analysts' tone reflecting concerns about fundamental performance outside the confines of financial results along with the related reliability of financial results, even though analysts rarely publicly admonish firms for their financial reporting quality.