Companies that have their stock traded in the public markets are obligated to provide certain disclosures both to the regulatory body in the region and to investors. One way that this is achieved is through an earnings call — a telephone conference call that is open to the financial community, including investors. Earnings results, which are a reflection of a company’s financial health and typically are provided on a quarterly basis, can influence the trading activity in a particular stock security in either a positive way or a negative way.
When a company plans its earnings announcement, it will release an announcement schedule to the public and provide some details about an earnings call. These details will include the time of the call in addition to a phone number and any code that is needed to access that conference call. The call is hosted by an executive team at the corporation that is reporting the financial results, including the chief financial officer, chief executive officer and probably some corporate attorneys.
These calls might be scheduled on the same day as an earnings announcement or on the following morning if the financial results were unveiled late in the day. A company will host one earnings call per earnings report, which often equates to four earnings calls per year. These events will unfold during an earnings season, which is a series of several weeks each quarter when publicly traded companies are required to report earnings to the public.
An earnings call might last anywhere from 30 minutes to more than an hour. The length of the call can be influenced by a question-and-answer session that typically begins after the company executives present the financial information and the details surrounding those numbers. After the presentations are complete, the executive team usually allows financial analysts, journalists and investors to ask questions about the financial results.
The trading activity in a particular stock following an earnings announcement, which comes in the form of a press release and a document filed with a regulatory body, can be greatly influenced by the earnings call. This influence stems from the fact that executives are on hand to expound upon any uncertainties surrounding the financial picture presented in those documents. If the numbers for revenue or profits are poor, members of the management might be able to explain that it was a one-time occurrence because of an independent event that will not continue into further quarters. Such an explanation could prevent investors from selling that stock in earnest.