Do Investors Benefit from Selective Access to Management?

Abstract:     
Regulation Fair Disclosure (Reg FD) was enacted in October 2000 to stop the practice of selective disclosure of information by managers to investors and analysts. Numerous studies indicate that Reg FD “leveled that playing field” by providing individual investors greater real-time access to disclosure. However, a new mechanism for selective access to managers has gained prominence since Reg FD: invitation-only conferences. We examine whether investors benefit from two potential opportunities for selective access at invitation-only investor conferences: formal “off-line” meetings outside of the webcast presentation and CEO attendance at the conference. We find significant increases in trade sizes during the hours when firms provide off-line access to investors and after the presentation when the CEO is present, consistent with selective access providing investors with information that they perceive to be valuable enough to trade upon. We also find significant potential trading gains over three- to 30-day horizons after the conference for firms providing formal off-line access, suggesting that selective access can lead to profitable trading opportunities. Our evidence suggests that selective access to management continues to convey benefits to certain investors even in the post-Reg FD period.

Number of Pages in PDF File: 54

Keywords: Regulation Fair Disclosure, Selective Disclosure, Conference Presentations, Informed Trading

JEL Classification: M41, K22

working papers series