Professional poker players pay close attention to discover "tells"—that is, giveaway signals that an opponent has a strong or weak hand. David Hayano, an anthropology professor who wrote a classic book on poker, says that classic amateur tells include smiling, touching one's nose, adjusting one's posture, and being chattier. And if you don't know how to look for tells, then Paul Newman has some advice: "If you're playing a poker game and you look around the table and and can't tell who the sucker is, it's you."
But tells might not only carry big stakes for poker players. A new NBER paper looks at how financial analysts look for "tells" during earnings conference calls with S&P 500 companies. During these calls, upper management (such as CEO, CFO, or chairpersons) brief investors and analysts on earnings and information that's relevant to the industry. Usually these calls begin with presentation information and end with a question and answer portion. For most companies, earnings calls are held for quarterly and yearly results.
The researchers looked at earnings call transcripts over eight years, from 2004 to 2012, to look at how much concrete information was revealed on the call and what kind of unquantifiable information might also be gathered from the language used on the call. They found one major "tell": that excessive use of negative words, what the researchers call "tone surprise," can predict a company's future earnings.