Insight

Analysts’ ‘con’ calls

How do firms maintain their image and ensure good vibrations for their brands?

Firms often resort to good, bad and ugly ways to maintain their image and ensure good vibrations for their brands. Researchers Lauren Cohen, Dong Lou and Christopher Malloy set out to figure out how companies control this information and found that they often conduct more earnings calls with bullish analysts. Such firms were more likely to underperform in future — barely meeting earnings forecasts — and see a significantly large amount of insider selling.

 

Title: Playing Favorites: How Firms Prevent the Revelation of Bad News.
Source: The National Bureau of Economic Research