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Conference Presentations, Investor Recognition, and Liquidity

Musa Subasi

University of Missouri at Columbia - Robert J. Trulaske, Sr. College of Business

Cihan Uzmanoglu

Binghamton University-SUNY

March 14, 2011

We examine the impact of analyst-hosted investor conferences on firm liquidity and cost of equity capital using a large sample of conference presentations made between 2005 and 2008. We find that both short- and long-term trading propensities improve following conference presentations. The reduction in liquidity risk manifests itself in the form of a decline in cost of equity capital during the post-conference presentation period. Our results are not homogeneous across all types of firms: Firms that are severely illiquid for various fundamental reasons do not simply enjoy a reduction in cost of capital by attending a conference. On the other hand, firms that are already relatively liquid become less sensitive to the market wide liquidity shocks following the conference attendance. We document that institutional ownership increases after conference presentations and the magnitude of change is significantly related to the reputation of the host. We also show that, conditional on presenting at a conference, firms achieve a greater reduction in their exposure to liquidity risk if they can improve their visibility by reaching to a larger institutional investor base. We test for possible selection bias as conferences are invitation-only events, but find no evidence of superior analyst selection ability. Our findings have important implications regarding the economic benefits of conference presentations and in explaining the abnormal return and trading activity on conference presentation days.

Number of Pages in PDF File: 48

Keywords: Conference Presentations, Liquidity Risk, Cost of Equity Capital

JEL Classification: G10, G14

working papers series

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Date posted: January 31, 2011 ; Last revised: July 15, 2011

Suggested Citation

Subasi, Musa and Uzmanoglu, Cihan, Conference Presentations, Investor Recognition, and Liquidity (March 14, 2011). Available at SSRN: http://ssrn.com/abstract=1751654 or http://dx.doi.org/10.2139/ssrn.1751654

Contact Information

Musa Subasi (Contact Author)
University of Missouri at Columbia - Robert J. Trulaske, Sr. College of Business ( email )
331 Cornell Hall
Columbia, MO 65211
United States
Cihan Uzmanoglu
Binghamton University-SUNY ( email )
Binghamton, NY 13902-6001
United States
607 777 66 38 (Phone)
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References:  18
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