Abstract

http://ssrn.com/abstract=1848323
 
 

References (61)



 


 



Investor Relations and the Flow of Information through Investor Networks


Judson Caskey


University of Texas at Austin - Red McCombs School of Business

Michael Minnis


University of Chicago - Booth School of Business

Venky Nagar


University of Michigan, Stephen M. Ross School of Business

April 10, 2015


Abstract:     
This study develops a model to examine how companies' investor relations can impact the dissemination of information and how the dissemination of information affects the time-series behavior of bid-ask spreads. In our model, investors become aware of the information release either directly from investor relations or via person-to person communication. The person-to-person communication then spreads in a network of heterogeneous individuals, where some serve as 'hubs' with high connectivity to others. We show that the optimal investor relations strategy relies on targeting highly connected investors, especially for time-sensitive and complex information. We also show that targeted disclosure can reduce bid-ask spreads over long horizons, indicating a benefit in terms of lower trading costs. We also show that investor relations activities to expand the investor base facilitate the optimal information release by increasing the number of hub-type investors who follow the company and therefore receive the initial information release.

Number of Pages in PDF File: 42

Keywords: disclosure, networks, investor relations, bid-ask spreads

JEL Classification: D85, G12, G14, M41


Download This Paper

Date posted: May 25, 2011 ; Last revised: April 14, 2015

Suggested Citation

Caskey, Judson and Minnis, Michael and Nagar, Venky, Investor Relations and the Flow of Information through Investor Networks (April 10, 2015). Available at SSRN: http://ssrn.com/abstract=1848323 or http://dx.doi.org/10.2139/ssrn.1848323

Contact Information

Judson Caskey (Contact Author)
University of Texas at Austin - Red McCombs School of Business ( email )
1 University Station, B6400
Austin, TX 78712
United States
(512)551-2796 (Phone)
Michael Minnis
University of Chicago - Booth School of Business ( email )
5807 South Woodlawn Avenue
Chicago, IL 60637
United States
Venky Nagar
University of Michigan, Stephen M. Ross School of Business ( email )
701 Tappan Street
Ann Arbor, MI MI 48109
United States
734-647-3292 (Phone)
734-764-3146 (Fax)
Feedback to SSRN


Paper statistics
Abstract Views: 1,021
Downloads: 238
Download Rank: 80,109
References:  61

© 2015 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo3 in 0.266 seconds