Temporal Focus and Analyst Scrutiny: Evidence from Earnings Conference Calls

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Abstract

Using the setting of earnings conference calls, this paper investigates the temporal focus of
management presentation during those calls, i.e., the extent to which managers allocate
their discussions to future firm prospects relative to past firm performance. We find a
negative association between firms’ past performance and the future focus of management
presentation. Moreover, the association is less negative for firms with more long-term
investors and is more negative for firms with high litigation risk. Additionally, we find that
the temporal focus of management presentation is positively associated with that of analyst
questions. We also find that managers’ future focus is positively associated with the
number of analysts following the firm but negatively associated with forecast quality of
analyst reports (lower accuracy and higher dispersion). Finally, We find the future
discussions in management presentation is positively associated with the time that analysts
took to release the next quarter’s forecasts.

Authors

• Yaxuan Li, Virginia Commonwealth University

• Mi Zhou, Virginia Commonwealth University