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Conference Calls Get Grouchier in the Afternoon

Afternoon earnings conference calls tend to be more negative, irritable and combative than those held in during the morning hours. This worsening conversational tone is associated with weaker stock price performance.

The weaker performance is particularly notable for companies reporting good news, defined as meeting or beating estimates, but holding their conference calls in the afternoon. Shares of these companies tend to experience a lower positive drift over the 50 days following the call relative to shares of companies holding their conference calls in the morning. Bad earnings news, defined as missing expectations, results in a seven-day drop for shares of companies reporting both in the morning and the afternoon that tends to be reversed afterward.

While there is not a direct impact on abnormal returns over the 50-day period following a conference call, there is a negative, lasting effect caused by the tone of the question-and-answer sessions. Holding a conference call at 3:00 p.m. instead of 8:00 a.m. increases net negativity. The greater negativity results in a 0.37% price decline for one quarter and a 1.5% decline for four quarters.

These findings are based on an analysis of more than 26,000 transcripts for earnings conference calls held between 2001 and 2007. All

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