OF MICHIGAN Working Paper Are Analyst

In earnings conference calls, management releases new information, and financial analysts on the call immediately respond and question management. The linguistic tone of analyst comments moves the stock price almost instantly in a manner that suggests that analyst assessment of management disclosures contains information not present in the disclosures themselves. Additional findings suggest that, in reacting to analyst tone, the market anticipates future analyst predictions and recommendations on the company, which can help to explain why prior studies have found mixed evidence on the subsequent market reaction to the release of those predictions and recommendations.