Buy-Side Analysts and Earnings Conference Calls

• In Event: Buy-side and Sell-side analysts forecasts

Abstract

Using a large sample of earnings conference call transcripts, we identify 4,045 buy-side analysts from 724 institutional investment firms that participated (i.e., asked a question) in 13,373 conference calls to examine the determinants and implications of their participation. Buy-side analysts are more likely to participate in conference calls when sell-side analyst coverage is low and the dispersion in earnings forecasts is high, consistent with buy-side analysts taking a more active role in acquiring information when a company’s information environment is poor. Institutional investors trade more of a company’s stock after their buy-side analysts participate in the company’s conference calls, suggesting that buy-side analysts revise or update their stock recommendations after participating in the conference call. We find evidence that the buy-side analysts we observe in conference calls and the post-conference call trading decisions by their employing institutions are reflective of other buy-side analysts and institutions that we do not observe. We contribute to the literature on buy-side analysts, which have traditionally been underexplored due to data limitations.

Authors

• Michael J Jung, New York University - Stern School of Bus

• M.H. Franco Wong, University of Toronto

• Frank Zhang, Yale University