Conference Calls

Structural Barriers to Accounting Users’ Interactions: A Critical Analysis of Earning Conferences

“…Our findings suggest that the macro structure of Kuwaiti banks' earning conferences conforms with international practices (Camiciottoli, 2010) and that the particularly important Q&A session is unregulated by many capital markets (Rocci & Raimondo, 2018), including Kuwait's. More pertinently, four structural thematic barriers significantly affect the quality of communication between banks' management and accounting users: constraining users to ask questions through texting in a verbal communicative situation; ending the Q&A session without answering all accounting users' enquiries; limiting Chief Executive Officers' (CEOs) interaction with accounting users; and failing to consider a prominent language barrier, given that some Chief Financial Officers' (CFOs) are non-native speakers.…”

“…Earning conferences started in the first quarter of 2018. Although conducting these conferences is mandatory, the capital market regulator and operator, as happens in many other capital markets (Rocci & Raimondo, 2018), neither regulates nor constrains companies' selective disclosures and communication styles within these events. However, in Kuwait only seven of the ten local banks are premier market listed.…”

“…Within earning conferences, effective communication promotes trust between management and stakeholders (Rocci & Raimondo, 2018) besides encouraging greater confidence in the capital market (J. Lee, 2016;Lev, 2012).…”

“…This structural form prevents effective engagement from participants, yet most banks have the Q&A operator receive questions then filter and combine them while disregarding some. Such an arrangement often facilitates managements' selective disclosures in its effort to limit negative consequences in relation to stakeholders and the market (Rocci & Raimondo, 2018). Regarding verbal discourse, restricting participants' interactions to textual queries suggests a management intention to build or maintain an asymmetrical relationship with stakeholders (Brennan & Merkl-Davies, 2018), which contradicts the basic principles of earning conferences (Camiciottoli, 2010;Frankel, Johnson, & Skinner, 1999;Rocci & Raimondo, 2018).…”

“…Such absences convey a negative signal to stakeholders and to the market -one of escaping responsibility toward stakeholders and even showing a lack of regard to earning conference participants (and, by extension, others). In contrast, the presence of the CEO (as the top managerial person) demonstrates commitment to stakeholders and strategy as well as responsibility regarding financial results (Rocci & Raimondo, 2018) besides being open to the appropriate scrutiny and understanding of these results. The attendance of the second or third person in the hierarchy is not an excuse for the top executive to be absent.…”