This paper examines whether market participants infer negative information about future unexpected firm performance when managers adhere to predetermined scripts when responding to questions during earnings conference calls. I argue that managers respond to questions from prepared scripts to avoid the disclosure of bad news. Using a measure of the adherence to predetermined language, I provide evidence that a lack of spontaneity is negatively associated with the market reaction to the call and with the abnormal returns in the subsequent quarter. I further find that analysts downgrade their forecasts following these calls. I also provide evidence that adherence to predetermined language is negatively associated with future unexpected firm accounting performance, supporting investors' negative response to it. Finally, I find that bid-ask spreads increase and firms are less likely to guide future earnings when managers adhere to the predetermined language of a script, suggesting that firms provide less information, not more, during these calls.

We examine the usefulness of support vector regressions (SVRs) in assessing the content of unstructured, qualitative disclosures by relating MD&A-based SVR-accrual estimates (MD&A accruals) to actual accruals. We find that MD&A accruals explain a statistically and economically significant portion of firm-level accruals and identify more persistent accruals. We find that the explanatory power of MD&A accruals is higher for more readable 10-Ks, thereby providing evidence for the construct validity of the readability measures. To highlight the flexibility of the SVR method, we apply it to other dependent variables and disclosures. We find that MD&A-based cash-flow forecasts produced by SVR predict next period’s cash flows. We apply SVR to conference call transcripts and find accruals estimates have similar explanatory power to MD&A accruals. Finally, the explanatory power of MD&A accruals increases between 1994 and 2013.

The Securities and Exchange Commission encourages the presentation of information or data in graphical form to improve users' ability to understand financial disclosures. We find a dramatic increase in the disclosure of both qualitative and quantitative infographics in 10-K filings over time and substantial cross-sectional variation in firms' choices regarding image types, data content, and the placement of infographics within 10-Ks. We provide evidence on factors associated with firms’ use of infographics and explore the persistence with which they are disclosed over time. Finally, we investigate the relation between the use of infographics and uncertainty in capital markets.

We investigate ethnic minority and nonminority sell‐side analysts’ participation in public earnings conference calls. We find that minority analysts are underrepresented in conference call Q&A sessions, and minority analysts who do participate on the calls experience lower levels of prioritization than do nonminority analysts. Minority analysts’ lower participation rates are partially but not fully mediated by characteristics such as experience, work environment, and stock rating favorability. Additionally, firm and conference call fixed effects mediate approximately half the magnitude of lower minority participation rates. Extroverted minority analysts participate at higher rates, but the negative association between minority status and conference call participation is exacerbated when calls are more time constrained, when executive teams are less diverse, and when analysts are from less prestigious brokerage houses. Overall, we document the underrepresentation of minority analysts on earnings conference calls and provide evidence suggesting both analysts’ and managers’ choices influence minority analysts’ participation rates.

We view audit-quality choice as one among many that managers make to maximize firm value. We question whether audit-quality differences among publicly traded companies are of significant interest to investors, clients, and auditors and ask for research on this topic. Relatedly, we ask for research on whether auditors and their clients show behavior consistent with regulated audit quality exceeding the audit quality level demanded absent regulation. We propose that researchers incorporate the competitive advantages of auditors and the institutional features of the audit process into the definition of audit quality. We propose that audit quality research test for externalities and inefficiencies to understand whether auditors and their clients are choosing the efficient level of audit quality. We note the legislative, judicial, and executive powers residing in the PCAOB.

We examine how the co-location of firms in the same industry affects analysts' cost of gathering and processing information. We find that when the firms in an analyst's portfolio are located farther away from other firms in the same industry, the analyst's portfolio size is smaller and average forecast accuracy is lower. We further find that the additional costs that analysts incur to follow distant firms are amplified when earnings are more difficult to forecast. Last, we provide some evidence that managers are more knowledgeable about other firms in the same geographic area. Specifically, managers are more likely to reference firms in their industry that are geographically closer during conference calls. This paper provides additional evidence that the co-location of firms in the same industry not only affects operating and strategic decisions (as documented in the existing literature), but also analysts' costs of gathering and analyzing information about the firm.