Harvard Business School study reports “picking favorites” on your earnings call is harmful

For anyone in a professional communication role, tracing an ROI trail from something said (in an IR blog, for example) to a buying decision is what we call “#winning.” However, in a B2B sales environment, a direct trail is rare. The same is true for investor relations. Trying to back-track an institution taking a position from a news release or earnings call (to quote Scotty from the Star Trek 2009 reboot) “is like trying to hit a bullet with a smaller bullet whilst wearing a blindfold… riding a horse.”

readnews

But what about what was NOT said? Can that hurt?

Apparently, it can. A very interesting new study from the Harvard Business School looked at the practice of only taking questions from “friendly” analysts on the earnings call.

From the paper:

“We explore a subtle but important mechanism through which firms manipulate their information environments. We show that firms control information flow to the market through their specific organization and choreographing of earnings conference calls. Firms that [bias] their conference calls by disproportionately calling on bullish analysts tend to underperform in the future. Firms that call on more favorable analysts experience more negative future earnings surprises and more future earnings restatements.”

The report is titled Playing Favorites: How Firms Prevent the Revelation of Bad News. You can download it here.

Certainly, this is a report that all communicators (and regular folks)  believe in ~ but most will find it very hard to put into practice. If any group has the authenticity fortitude and transparency DNA to put this into practice, it is IR.

Have a great day.

One response to “Harvard Business School study reports “picking favorites” on your earnings call is harmful

  1. gee, at my company, we don’t get to cherry pick. happy about that!

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