Corporate Jets and Private Meetings with Investors
Brian J. Bushee
University of Pennsylvania - The Wharton School
University of Chicago - Booth School of Business
Lian Fen Lee
Boston College - Carroll School of Management
October 9, 2013
Chicago Booth Research Paper No. 12-43
We use corporate jet flights to “money centers” to identify periods in which mangers are likely to be engaging in private, face-to-face meetings with investors. We predict that such meetings enable select investors to supplement and trade on their private information, leading to price and volume reactions during the flight periods. Using a sample of almost 400,000 flights undertaken by 396 firms between 2007 and 2010, we find evidence consistent with money center flights being used to communicate privately with investors. First, we find that the number of flights to money center cities is significantly associated with a number of proxies for incentives to meet privately with investors. Second, we find that three-day windows including money center flights exhibit significantly greater information content than windows with only flights to other cities. Third, we find that the size-adjusted returns surrounding flights to multiple money centers are, on average, positive. Overall, our evidence suggests that these private meetings are an important information event for the participating investors, who potentially gain an advantage over nonparticipating investors who have no public notice of the meetings.
Number of Pages in PDF File: 56
Keywords: Selective disclosure, Corporate jets, Institutional investorsworking papers series
Date posted: September 5, 2012 ; Last revised: October 10, 2013
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