A roundup of academic research from the world of IR studies
Questions
1. Analyst speaking tone during quarterly conference calls is most positive when the firm:
a) Avoids losses
b) Avoids negative earnings falls from prior period earnings
c) Avoids negative earnings surprises relative to analyst forecasts
2. Analysis of management tone during conference calls reveals that pessimism is significantly related to increased or decreased analyst accuracy?
3. Which is the better strategy for continental European firms: cross-listing abroad or using English in press releases?
4a. True or false? Enhancing corporate governance quality improves operating performance and overall financial profitability of central and east European (CEE) countries.
4b. Which CEE countries have the best corporate governance?
5. Fill in the blanks: a sample of 285 Bangladeshi listed firms reveals _ percent have websites and, of those, _ percent provide financial information.
6. True or false? The press quotes high-quality analysts.
7. On average, Turkish listed companies disclose a) 16 b) 5.4 or c) 2.1 financial ratios in their annual reports.
8. Australian socially responsible investors are most interested in:
a) Issues of social conscience
b) The environment
c) Social health issues
9. Indian investors respond most strongly to:
a) Fundamentals
b) Technical data
c) Mass media communication
10. Your company advertises little and has a poor prior reputation as a corporate citizen. Will CSR activities add value?
Answers (one point per correct answer)
1. (c), according to a University of Michigan study. Textual analysis also finds analyst tone predicts ‘buy’ recommendations and the probability of a company meeting analyst consensus in the subsequent quarter.
2. A 1 percent rise in the pessimism of a conference call results in a decrease in analyst accuracy by approximately 10 percent, according to a Virginia Tech study.
3. Tough call, but a French/Swiss study on targeted communications and investor attention finds continental European firms using English language wires exhibit less drift and 12 percent more trading volume after their earnings announcements than those that do not.
4a. Latvian researchers say ‘false’. In fact, while doing better in terms of profit margins, companies with the best governance ratings have the worst overall profitability.
4b. According to a Riga Technical University report, highest overall scores go to Estonian, Lithuanian and Slovenian companies, ‘which have very good information disclosure and excellent IR.’
5. About 30 percent have websites and 28 percent provide financial information.
6. True. Investigators at Texas A&M University also find analysts with unfavorable opinions are more likely to be cited than favorable analysts.
7. (b)
8. (a) and (c), according to a report in the Australian Journal of Management.
9. (c), just like US investors.
10. Probably not and they may even backfire, warn the UK authors of a forthcoming report in Management Science.
How did you do?
1-3: Count on your good looks.
4-8: Your looks still count, but not as much.
9-10: You are beautiful to me.
