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How informative is question-and-answer similarity to financial analysts? Evidence from Chinese earnings communication conferences

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  • Liu, Qigui
  • Chi, Wenqiang
  • Wang, Junyi

Abstract

Reducing the information asymmetry between managers and external investors is a fundamental issue in economics and finance. By allowing investors to communicate directly with managers, earnings communication conferences (ECCs) have become an important way to deliver information to the market. The existing literature focuses on the answer content of ECCs in the United States. However, the information value of question-and-answer (Q&A) similarity has been ignored. Based on 48,085 firm-analyst-year observations for 2008–2019, we examine the informativeness of Q&A similarity in ECCs to analysts. Specifically, Q&A similarity improves forecast accuracy and reduces optimism bias through the information content and analysts’ site visit channels. Information value is more pronounced in firms with weaker governance and analysts with better industry specialty. Overall, we provide evidence that regulators should take action to improve communication quality in ECCs.

Suggested Citation

  • Liu, Qigui & Chi, Wenqiang & Wang, Junyi, 2024. "How informative is question-and-answer similarity to financial analysts? Evidence from Chinese earnings communication conferences," Economic Modelling, Elsevier, vol. 135(C).
    • Handle: RePEc:eee:ecmode:v:135:y:2024:i:c:s0264999324000567
    DOI: 10.1016/j.econmod.2024.106700
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