Managerial Learning from Conversations with Analysts in Conference Calls

Abstract

This thesis investigates how managers learn from analysts through direct communications in conference calls, with focus on how limited managerial attention shapes this learning process. While prior research documents that managers learn from external signals, relatively little is known about how they learn and prioritise more granular information provided by analysts. By examining the direct communication between managers and analysts during conference calls, this study provides evidence that managers incorporate analysts' forecasts and topical alignment into guidance decisions, following the interactions. Central to this study is the notion that managers, constrained by limited attention, rely on thematic signals to filter and assimilate relevant information received from external sources. Using Latent Dirichlet Allocation to identify the topics embedded in conference call conversations, this study constructs a measure of how closely the focal analyst issuing the revision aligns thematically with other analysts. The findings reveal that while managers learn from analysts' forecast revisions, the extent of the learning increases when the focal analysts' topical interests align with peers. Managers find it easier to recognise the salience of those signals and integrate them into their subsequent guidance decisions. The attention-driven filtering is more pronounced when analysts convey bad news, possess relative industry knowledge, or when managers are in stronger demand for external information. Overall, this thesis provides direct evidence that managerial learning depends not only on the inherent nature or quality of the information but also on the selection of information bounded by managers' limited attention. By emphasising how managers identify, prioritise and respond to analysts' insights, this study provides novel evidence of the cognitive mechanics underlying the learning process and highlights the role analysts play in corporate decision making.