No. 102: Communication norms in earnings conference calls: The role of indirect questions

Abstract

I study the determinants and consequences of indirect questions in earnings conference calls. Motivated by extensive evidence from the conversation analysis literature that documents a substantial relevance of how questions are phrased, I expect and find that especially analysts with lower firm-specific (general) experience and less favorable views of the firm make use of indirect questions. If analysts ask indirect questions, they can increase the managements’ information provision but also raise the risk of receiving no answer. Furthermore, I find mixed evidence that management publicly interacts more favorably with analysts who ask indirect questions. Moreover, my results indicate that analysts can increase their private access to the management by phrasing their questions in an indirect manner. Overall, my results extend current literature on analysts’ questioning which primarily focuses on the questions’ content (what is the question about) by highlighting the relevance of how questions are phrased.