Department of Accountancy Assistant Professor Jared Flake has been published in the Journal of Accounting Research, a top-tier journal on the Financial Times 50 list with a high impact factor among accounting journals. Flake published the paper “To Interact or Not? On the Benefits of Interacting with Unfavorable Analysts during Earnings Calls.”
His paper investigates how company managers publicly engage with financial analysts who hold unfavorable views. It examines the factors that influence these interactions during quarterly earnings calls and the benefits companies gain.
To address this, the study produced several findings:
- Managers interact more with unfavorable analysts when compelled to do so.
- Unfavorable analysts tend to soften their negative views after interacting with managers.
- Company financial forecasts are perceived as more credible when managers regularly interact with these analysts.
- Firms experience less negative stock market reactions during times of peer accounting issues if their managers regularly interact with unfavorable analysts.
Overall, the research indicates that companies experience significant benefits when managers engage with unfavorable analysts during public earnings calls, improving credibility and trust.