Wall Street analysts unearth company information beyond the conference call

Jun 19, 2014 by Greta Guest

(Phys.org) —After reviewing nearly a half million analyst reports up against thousands of conference call transcripts, one thing is abundantly clear: Wall Street analysts do their homework.

According to a new University of Michigan study of more than 470,000 analyst reports and 18,000 conference call transcripts, highlight in reports for investors that aren't mentioned on calls with corporate officers and flesh out issues given just brief mentions on the calls.

"We document that the distribution of topics in analyst research reports is statistically different from that in the presentation part of the conference call in about 70 percent of the cases," said Reuven Lehavy, professor of accounting at the Michigan Ross School of Business.

"This finding suggests that analysts frequently provide new information by discussing exclusive topics not mentioned on the call, and that's consistent with their information discovery role."

Lehavy and colleagues Allen Huang, Amy Zang and Rong Zheng of the Hong Kong University of Science and Technology also compared the vocabularies used by analysts and managers to discuss the top 10 topics on the call. They found they were statistically different 49 percent of the time, suggesting that analysts interpret information from the calls to better inform investors.

To conduct their analyses, the researchers used novel measures to identify the precise information role that analysts play in the capital market. By sifting through the analyst reports to measure their thematic content, they were able to explicitly identify and empirically quantify the amount of information discover and interpret in their reports without reference to the equity market reaction.

Explore further: Sell-side analysts lean towards high valuation companies for comparison, study shows

More information: The complete study is available online: papers.ssrn.com/sol3/papers.cf… ?abstract_id=2409482

add to favorites email to friend print save as pdf

Related Stories

How much is Yahoo worth? The case for buying

Jan 04, 2012

(AP) -- It's losing business to Google and Facebook. Its stock has gone nowhere since 2008. It just announced its fourth CEO in five years. It's enough to make investors replace the exclamation point in the logo with a question ...

Recommended for you

Predicting human crowds with statistical physics

Feb 27, 2015

For the first time researchers have directly measured a general law of how pedestrians interact in a crowd. This law can be used to create realistic crowds in virtual reality games and to make public spaces safer.

Bribery 'hits 1.6 billion people a year'

Feb 27, 2015

A total of 1.6 billion people worldwide – nearly a quarter of the global population – are forced to pay bribes to gain access to everyday public services, according to a new book by academics at the Universities of Birmingham ...

Broken windows thesis springs a leak

Feb 27, 2015

The broken windows theory posits that minor misdemeanors, like littering or graffiti spraying, stimulate more serious anti-social behavior. LMU sociologists now argue that the idea is flawed and does not ...

User comments : 0

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.