Earnings Call Tone and Investors' Reliance on Mandatory Disclosures

This study examines whether the tone of earnings conference calls is associated with investors' subsequent use of firms' mandatory disclosure filings. Using conference call transcripts and EDGAR web traffic data from 2007 to 2016, I find that more positive conference call tone is followed by lower subsequent requests for firms' periodic filings. This relation persists after controlling for firm characteristics, earnings news, analyst following, institutional ownership and leverage, and remains robust in matched sample and weather‐based analyses. I further find that more positive tone is associated with lower implied volatility after the call, consistent with lower perceived uncertainty. The relation between tone and subsequent EDGAR search is also stronger when analyst following and leverage are higher, consistent with a greater role for managerial communication when external scrutiny and verification incentives are stronger. Overall, the findings link voluntary managerial communication to investors' subsequent use of mandatory disclosures.