Does an Analyst's Access to Information Vary with the Favorableness of Their Language When Speaking to Management?

Analyst Conflict of Interest and Earnings Conference Call Informativeness

“…net positive tone) in the analyst statements to management (Loughran and McDonald, 2011). The second measure captures the extent to which analysts praise (DL_PRAISE) management, as captured by the proportion of praise words in analyst questions Milian, Smith, and Alfonso 2017). The third measure is the linguistic tone of managerial responses to analyst questions (DL_MGR_TONE), which is identical to analyst tone but measured solely from the text of manager responses.…”

Do Analysts and Their Employers Value Access to Management? Evidence from Earnings Conference Call Participation

“…direct measures of analysts' access to management in the literature, such as site visit experience (Cheng, Du, Wang, and Wang (2016)) and private communications with management (Soltes (2014), Brown et al (2015)), our measure captures an analyst's access to management that potential employers can publicly observe, verify, and compare. Further, our measure differs from studies that solely capture analyst favoritism, such as optimism in earnings forecasts or recommendations (Chen and Matsumoto (2006), Ke and Yu (2006)) or the tendency of analysts to praise managers in earnings conference calls (Milian, Smith, and Alfonso (2017)). While these measures capture an analyst's strong desire to build a good relationship with management and such favoritism can be easily mimicked by other analysts, our measure reflects the recognition of a relationship from the manager's perspective, which could be more informative to potential employers.…”