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Earnings calls: new evidence on corporate profits, investment and financing conditions

Author

Listed:
  • Andersson, Malin
  • Neves, Pedro
  • Nunes, Carolina

Abstract

This box analyses sentiment indices of profits and investment that have been compiled from a new data source, namely earnings call transcripts of listed euro area firms. It shows that these data series have correlated well with standard investment and profit series over the past two decades. It also demonstrates that profit sentiment has improved since the third quarter of 2021, while corporate investment sentiment rose slightly further in the second quarter of 2023, despite tightening financing conditions. At the sectoral level, profit sentiment in the services and utilities sectors has held up better than it has in the manufacturing sector since last year. In addition, an indicator of financial risk extracted from the earnings call data shows that firms are highly concerned about rising financing costs and perceive tighter financing conditions as a clear risk. JEL Classification: E22, E30, E32

Suggested Citation

  • Andersson, Malin & Neves, Pedro & Nunes, Carolina, 2023. "Earnings calls: new evidence on corporate profits, investment and financing conditions," Economic Bulletin Boxes, European Central Bank, vol. 4.
    • Handle: RePEc:ecb:ecbbox:2023:0004:2
    Note: 427284
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    File URL: https://www.ecb.europa.eu//press/economic-bulletin/focus/2023/html/ecb.ebbox202304_02~40e3556f39.en.html
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    Citations

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    Cited by:

    1. Stefan Collignon, 2024. "The Tale of Two Economies: Inflationary Dynamics in the Euro Area and the US in the Context of Uncertainty," Economies, MDPI, vol. 12(7), pages 1-29, June.
    2. Tarek Alexander Hassan & Stephan Hollander & Aakash Kalyani & Laurence van Lent & Markus Schwedeler & Ahmed Tahoun, 2024. "Economic Surveillance using Corporate Text," NBER Working Papers 33158, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    financing conditions; Investment; profits;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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