Earnings call definition
/What is an Earnings Call?
An earnings call is a conference call between the senior managers of a public company and members of the investment community, to discuss the performance of the business. Earnings calls are intended to provide investors with additional clarification about the financial results and financial position stated in a firm’s financial statements, typically expanding upon and explaining financial information. Many entities record these calls and then post them in the investor relations section of their websites, so that anyone can access them.
Smaller public companies that cannot afford an investor relations officer may not bother with earnings calls, since they are not required by the government.
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Public Company Accounting and Finance
Advantages of an Earnings Call
Analysts find these calls to be useful, since they may provide valuable clues about the financial situation of a business that could lead to changes in a firm’s stock price. Since these calls enhance relations with investors, they can be a useful tool when the firm wants to engage in fund raising at a later date.
Structure of an Earnings Call
Members of senior management read a prepared statement and then take questions from anyone attending the call.
When to Schedule an Earnings Call
An earnings call is usually held immediately after a firm’s issuance of its annual or quarterly financial report.