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Operations Management and Econometrics

When Does Soft Talk Matter?: Evidence from Officer Quotations in Earnings Press Releases

Professor Paul Fischer, Smeal College of Business Administration, The Pennsylvania State University

18th Jun 2010  11:00 am - Room 498 Merewether Building

We employ a sample of quotations from earnings press releases to ascertain factors influencing the information content of qualitative disclosures by management. We find that, after controlling for quantitative aspects of the earnings release disclosure, the degree of optimism conveys significant incremental information content when quantitative earnings guidance is not provided in the release. The information content of the degree of optimism is reduced when quantitative guidance is provided, which is consistent with quantitative guidance crowding out information transmission via qualitative disclosure. In addition, we provide some evidence that the information content of qualitative disclosure is enhanced if management perceives greater litigation risk and is reduced when investors have less favourable perceptions of management.