Predictive Power of Sentiment on Earnings Q&A

One of the most closely followed events on the corporate calendar are earnings calls. This gives executives the opportunity to comment on earnings and answer questions from those outside of the company. Using our patented Natural Language Processing, Social Market Analytics scores Earnings Call Transcripts in real time and creates metrics based on sentiment, word count, and section count. For this research, we look specifically at the question-and-answer section of call transcripts. The theory is that isolating the section of the call where executives aren’t controlling the topic of conversation will give a more accurate assessment of the sentiment surrounding earnings results. We use Sum of Sentiment to quantify the positivity of the call. Sum of Sentiment adds all the words and phrases tagged in the section with sentiment. The following histogram shows the distribution of the Sum of Sentiment variable.