The Price of Silence: When No One Asks Questions During Conference Calls

We document economically significant indirect costs of providing conference calls—increase in information asymmetry and more negative immediate market reaction—when managers fail to elicit questions during the calls’ question-and-answer (Q&A) session. We establish this result by focusing on earnings calls where managers fetch either zero questions or “too few” questions when they open the floor for questions. We extend the literature on conference calls as an important communication medium by examining a hereto unexamined cost, and propose remedies for firms to avoid such indirect costs of corporate communication.

This seminar is organised by the Erasmus Accounting Research Group.