Earnings Conference Calls’ Tone in Just Meet-Beat Firms: Evidence from the UK

This research evaluates the earnings conference calls’ tone in firms that meet or just beat the earnings benchmarks (Just Meet-Beat Firms). In particular, it examines the relationship between firms that meet or just beat the earnings benchmarks and managers’ tone disclosed during the earnings conference call. It also examines whether there are significant differences between managers and audience tone in the call of Just Meet-Beat Firms. All non-financial firms considered in the FTSE 350 list for the period from 2010 to 2015 are taken in the sample. The results report that managers in Just Meet-Beat Firms disclose more positive tone during the earnings conference call than other firms. The results also show that there are significant differences between managers and audience tone in earnings conference calls of Just Meet-Beat Firms and the managerial tone has a higher value of mean than the audience tone in earnings conference calls of Just Meet-Beat Firms. This research is beneficial for market participants. For example, it alerts external users to be more cautious about the manger’s tone provided in the earnings conference call for Just Meet-Beat Firms. However, the external users need to consider carefully the audience tone in the call, since it reflects the truth about managers’ performance.