The Spillover Effect of Conference Calls on Analyst Forecasts along the Supply Chain: An Example from the Semiconductor Industry

• In Event: Concurrent Session 1.4: Analysts and Other Market Intermediaries

Abstract

The objective of this paper is to examine whether and how analysts’ forecasts for a firm transfer along the supply chain. Focusing on the semiconductor industry in Taiwan, we first hypothesize and find that when releasing or revising earnings forecasts, analysts typically incorporate financial and non-financial information contained in conference calls held by their upstream firms in the supply chains. Second, we find that the extent to which analysts incorporate information in the conference call held by its upstream supply chain partners systematically varies with the echelon distance of the firms. Specifically, we find that the analysts’ forecast of the downstream supply chain partners would be less related to the presence of conference call held by its upstream supply chain partners as the echelon distance between the two partners goes far. Finally, we find that when issuing forecasts, foreign analysts use both financial and non-financial information in conference calls held by its upstream supply chain partners, while local analysts focus mainly on the non-financial information.

Authors

• Chen Lung Chin, National Chengchi University

• Kai-Ting Nien, National Chengchi University