Earnings Conference Calls and Lazy Prices

Chuancai Zhang
Changes to the language and construction of financial reports are indicative of firms’ future returns and operations. Investors, however, are often inattentive to these changes; consequently, price reactions to these changes are delayed—resulting in “lazy” prices. This study explores two possible channels through which earnings conference calls may mitigate lazy prices: (1) the topic overlap channel and (2) the comparison language channel. Specifically, I examine whether the topic overlap between conference call transcripts and 10K/10Q...
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