ABSTRACT

We construct a novel measure of disclosure choice by firms. Our measure uses linguistic

analysis of conference calls to flag a manager’s response as providing an explicit “nonanswer”

to an analyst’s question. Using our measure, about 11% of questions elicit nonanswers,

a rate that is stable over time and similar across industries. Consistent with

extant theory, we find firms are less willing to disclose when competition is more intense,

but more willing to disclose prior to raising capital. An important feature of our

measure is that it yields several observations for each firm-quarter, which allows us to

examine disclosure choice within a call as a function of properties of the question. We

find product-related questions are associated with non-answers, and this association is

stronger when competition is more intense, suggesting product-related information has

higher proprietary cost. While firms are more forthcoming prior to raising capital, the

within-call analyses for future-performance-related questions shows firms are less likely to

answer future-performance-related questions shortly before equity or debt offerings when

legal liability is higher.