Three essays on information dissemination : evidence using textual analysis

Abstract

In Chapter Two, I investigate gender issues in interactions between two high-profile professions—sell-side analysts and public firm executives using a large sample of quarterly earnings conference call transcripts. I find that women are generally less “visible” on conference calls. Specifically, female analysts have fewer conference call participation opportunities. Conditional on participation, female analysts are allowed fewer opportunities to ask follow-up questions and speak less compared with male counterparts. Female analysts speak with more positive tone, less uncertainty, less numerical content, fewer speech hesitations, and fewer back and forth conversations with firm management. Female executives have shorter discourses and receive more rounds of questions from analysts. However, female executives exhibit more certainty and hesitate less, indicating superior abilities in answering analysts’ questions. My analysis of speech interruptions finds that female analysts are interrupted less by female, but not male, executives. Moreover, female executives receive more interruptions from both male analysts and executives and are more likely to be challenged by male subordinates. The equity market also discounts female analysts’ participation. Overall, my results are consistent with gender-based discrimination.

This dissertation consists of three essays on information dissemination in financial markets. Specifically, I employ textual analysis to tease out various subtle information that is difficult to gather with traditional approaches and then examine how this information helps us answer important questions in the disciplines in finance and accounting.

Chapter Three examines gender differences in textual characteristics of analyst reports. I find female analyst reports are more readable but shorter. Consistent with an “ethical standard” explanation, the textual sentiment of female analyst reports is less optimistic. Moreover, female analyst reports contain less financial content and are more long-term oriented. Male analysts’ reports induce stronger market reactions when readability is higher, but the opposite is true for female analysts. Female analysts improve report readability more over their career than male analysts do. Out results provide evidence of gender stereotyping in the analyst profession.

In the first chapter, I use the presence of a Wikipedia article for initial public offering (IPO) firms to test theories of information asymmetry and investor awareness. While I find limited support for the former, my results provide strong support for theories of investor awareness. Specifically, IPO firms with a Wikipedia article exhibit significantly higher underpricing than do IPO firms without a Wikipedia article. Investor awareness has positive long-term effects, including greater analyst following and institutional ownership for up to three years after the offering. The effect is robust to firm-specific Google search volume, news coverage, propensity score matching, and an instrumental variable approach.