Investor Conferences, Stock Liquidity, and Firm Performance
University of Missouri at Columbia - Robert J. Trulaske, Sr. College of Business
November 3, 2014
Nascent literature suggests that CEO time spent with outsiders is less beneficial to the firm than time spent with insiders, yet company executives spend increasingly more time every year at conferences making presentations to potential investors. While the costs of such time away from the firm are clear, researchers are only beginning to identify and measure the potential benefits. We examine improvement in stock liquidity as an economic benefit from presenting at conferences. We find that firms participating at conferences experience a 1.4% to 2.8% increase in stock liquidity compared to non-conference firms. The improvement in liquidity increases for firms with low pre-conference visibility, decreases with the number of conference presentations in a quarter, and varies predictably with conference characteristics that affect the ability of investors to update their priors about the firm. We also show that, in contrast to its effect on liquidity, conference activity does not affect firm stock performance.
Number of Pages in PDF File: 60
Keywords: Conference Presentations, Liquidity Risk, Cost of Equity Capital
JEL Classification: G10, G14working papers series
Date posted: January 31, 2011 ; Last revised: November 4, 2014
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