May 13, 2024
New research used RavenPack data to analyze how analysts' unique questions can uncover more information during earnings calls, and even move markets.
A recent study by Kristian D. Allee, Chuong Do, and Huy N. Do, investigates the role of analyst questioning during earnings conference calls. The paper, titled "Can analysts elicit useful information by asking unique questions in earnings conference calls?” uses a dataset of over 99,000 transcripts, as well as analyst information and news, to evaluate how the uniqueness of an analyst's questions impacts the course of the call, and market reaction.
To understand how recent news coverage influences the types of questions analysts ask, the study integrates news analytics from RavenPack. Concretely, the paper leverages RavenPack's Aggregate Event Sentiment (AES) and Aggregate Event Volume (AEV) scores to analyze how press coverage preceding earnings calls shapes analysts' information-gathering strategies.
Negative press leading up to a call can prompt analysts to ask more diverse questions, perhaps to reflect investor concerns. Similarly, a surge in news coverage before the call leads analysts to delve deeper with questions that differ more from the management narrative.
Interestingly, negative press leading up to a call can prompt analysts to ask more diverse questions, perhaps to reflect investor concerns. Similarly, a surge in news coverage before the call leads analysts to delve deeper with questions that differ more from the management narrative. This could be a way for analysts to showcase their expertise in a highly visible setting.
Here are some of the other key findings of the paper:
Overall, the study provides valuable insights for investors who want to consider the characteristics and questioning style of analysts when evaluating their forecasts. It also offers guidance to analysts themselves, suggesting that crafting unique and well-informed questions can lead to better information gathering and ultimately, more accurate forecasts.
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