Browsing by Author "Rountree, Brian"

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    Does ESG Honesty Pay? Evidence from LGBT Support and Disclosure
    (2024-04-18) Pears, Geoffrey R; Sivaramakrishnan, Konduru; Rountree, Brian
    Firm ESG strategy contains twoe lements: real support and disclosure. While correlated, real ESG support and disclosure of that support are separate decisions, and firms can do both, neither, or either one without the other. In an LGBT setting, I classify firms based on their real LGBT support and their disclosure of that support. I study the effects of full support, silent support, non-support, and virtue signaling, and I find that firms have lower net income, market share, revenue, and market capitalization when they are virtue signalers and when they are silent supporters. This is true both across firms and within firms over time, and the results are robust to selection adjustments and alternative variable measures. In cross-sectional tests, I show the results are weaker for firms in consumer-facing industries and stronger for firms with more diverse employee bases, suggesting the benefits of LGBT support and disclosure are driven by employee stakeholders and not consumers. Additionally, consistent with strategic ESG disclosure, I find that ESG support and disclosure decisions are driven by close competitors. Last, in a novel descriptive result, I show that LGBT non-support is concentrated in the quartile of industries with the lowest percentage of female and minority employees.
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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.