Executives tend to call on the friendly analysts during earnings calls. A new study suggests they would do better to take questions from the skeptics too, because companies whose managers engage with unfavorable analysts gain credibility with the market.
The paper is by Jared Flake, an accounting researcher at Boise State University. It was published online on June 18, 2025, in the Journal of Accounting Research, and appears in the journal’s December 2025 issue.
Why managers favor the friendly voices
Managers prioritize favorable analysts on calls, which in turn rewards analysts for staying optimistic. Yet managers also often take questions from analysts with negative views, and Flake set out to explain when that happens and what it buys them.
His first finding is that managers interact more with unfavorable analysts when they are compelled to do so.
Softer critics and stronger forecasts
The study points to two payoffs. Unfavorable analysts moderate their negative views after they get to interact with management. And when managers who regularly engage critics issue a forecast, the stock price reacts more strongly, which Flake reads as a sign that their reporting is seen as more credible.
To test the credibility idea further, he used accounting restatements at peer firms as outside shocks to how investors judge a sector’s accounting quality. Among firms that did not restate, those whose managers regularly took on unfavorable analysts saw smaller negative stock returns than their peers.
The benefits held whether the conversations with critics were compelled or voluntary.
Study Details:
- Title: To Interact or Not? On the Benefits of Interacting with Unfavorable Analysts During Earnings Calls
- Authors: Jared Flake
- Journal: Journal of Accounting Research
- Publication Date: June 18, 2025 (online); December 2025 issue
- DOI: 10.1111/1475-679X.12629