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Extreme Language in Earnings Conference Calls - Investor Response

Paper instructions:Read the instructions carefully, I値l return if the paper does not meet all the below guidelinesA research paper on an academic accounting topic is required for this class.The topic should address some topic related to the financial reporting environment.Students must identify a topic.The discussion thread can be used to get feedback for the topic from the professor.As a start, the student should look at recent (last 5-7 years) of research in the following journals:

1. The Accounting Review

2. Accounting Horizons

3. Journal of Accounting Research

4. The Journal of Accounting and Economics.

Once a topic has been identified, the journal痴 bibliography, plus library and google scholar searches can be used to find further information on the topic. Students should include at least 5 scholarly journals.Other journals and citations may be included if they support the paper.

The paper needs to clearly identify the thesis of the research.To support this notion, the student should have a sentence somewhere in the first paragraph that states .乃he purpose of this paper is to 典he paper should have an Introduction, literature review to support the purpose and a conclusion.

(The paper can include other elements but this is a minimum that would be needed.As an example of this process, I noted an article that I found intriguing in the most recent The Accounting Review:Khrystyna Bochkay, Jeffrey Hales, and Sudheer Chava (2020) Hyperbole or Reality?

Investor Response to Extreme Language in Earnings Conference Calls. The Accounting Review: March 2020, Vol. 95, No. 2, pp. 31-60.ABSTRACT We develop a dictionary of linguistic extremity in earnings conference calls, a setting where managers have considerable latitude in the language they use, to study the role of extreme language in corporate reporting.

Controlling for tone (positive versus negative) of language, we document that when managers use more extreme words in earnings conference calls, trading volume around the call increases and stock prices react more strongly. In addition, both effects are more pronounced for firms with weaker information environments.

Linguistic extremity also affects analyst opinions and contains information about a firm's future operating performance. As such, our results provide evidence that markets are influenced not just by what managers say, but also how they say it, with extreme language playing an important role in communicating reality and not merely reflecting hyperbole.
A review of the bibliography leads me to other information about conference calls.

Davis, A. K., W. Ge, D. Matsumoto, and J. L. Zhang. 2015. The effect of manager-speci?c optimism on the tone of earnings conference calls. Review of Accounting Studies 20 (2): 639673. https://doi.org/10.1007/s11142-014-9309-4Frankel, R., M. Johnson, and D. J. Skinner. 1999. An empirical examination of conference calls as a voluntary disclosure medium. Journal of Accounting Research 37 (1): 133150.

https://doi.org/10.2307/2491400Kimbrough, M. D. 2005. The effect of conference calls on analyst and market underreaction to earnings announcements. The Accounting Review 80 (1): 189219.

https://doi.org/10.2308/accr.2005.80.1.189Larker, D. F., and A. A. Zakolyukina. 2012. Detecting deceptive discussions in conference calls. Journal of Accounting Research 50 (2): 495540.

https://doi.org/10.1111/j.1475-679X.2012.00450.xBy reading these articles, I learn something about conference calls and their role in financial reporting.These articles may lead me to other research not cited by the first paper.I also do a google scholar search on the topic. From the readings, I also learn that there are some SEC rules about it.I first try to understand the nature of conference calls and listen to 3-4 to better understand them.

I may use some of these as examples in my paper.I also read the regulatory requirements regarding conference calls.At this point, I try to start to develop my thesis:(keep in mind, I have not read these papers and this idea is off the cuff)Potential idea:The purpose of this paper is to explain how investors may learn additional information, beyond financial statements and MD&A, about future firm performance from the tone and language used by management during conference calls.

I then refine the purpose of the paper, as necessary and start to develop an outline.I may need to expand or retract the topic of the paper depending on how big it is.When finished you should read the paper out loud to determine if it makes sense and possibly have someone else read it to comment on clarity and writing quality.

The body of the paper should be between 5-8 not counting the bibliography, graphs, figures, tables, or the cover page.You are not required to include graphs or figures but these do not count as part of the paper.Note:If a large part of the paper is quoting someone else, you can expect a low grade.This is meant to evaluate your ability to synthesize and describe a topic related to financial reporting.I don稚 care if someone else has that ability.

Extreme Language in Earnings Conference Calls - Investor Response

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