Corporate Jets and Private Meetings with Investors

Abstract:     
We use corporate jet flight patterns to test whether managers use jets for private, face-to-face meetings with investors. We predict that flights to “money center” locations are more likely to entail private meetings with investors than flights to other locations. 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 privately communicate 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 privately meet 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 flights to non-money-center cities with high local firm-specific institutional ownership exhibit greater information content than flights to cities with little or no institutional ownership in the firm. Fourth, we find that changes in flights to a metro area are positively associated with changes in local institutional ownership. Overall our evidence suggests that these private meetings are an important information event for the participating investors.

Number of Pages in PDF File: 54

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